Foreign Trade Zone Benefits Edison, New Jersey

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Foreign Trade Zone BenefitsEdison, New
Jersey
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What Benefits do Zones Offer?

• Increased flexibility with just-in-time delivery,
  quotas and reduced Customs delays.
• Duty elimination on
• manufacturing in the U.S. and selling
  domestically.
• utilizing pick-and-pack operations where the
  "set" has a lower duty rate than the individual
  pieces.
• Duty-deferral until merchandise is shipped from
  the Zone into Customs territory. Merchandise may
  be held in a Zone indefinitely.
• Ability to hold most merchandise subject to
  quotas until the quota opens and/or the ability
  to bring such goods into the Zone and
  subsequently re-export them.

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What can you do in an FTZ?
A facility where goods may be ? received ?
stored ? manipulated ? manufactured ?
exhibited ? examined ? tested ? calibrated ?
destroyed ? exported ? repacked ? assembled ?
mixed with domestic goods ? title
transferred
With NO duties paid going into the zone!
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Is an FTZ right for You?
IF YOU ANSWER YES TO ANY OF THE FOLLOWING THEN
LOCATING IN AN FTZ CAN HELP.

• Do you manufacture, assemble or process with
  imports?
• Do you regularly pay more than 485 per week in
  merchandise processing fees?
• Do you scrap, reject, destroy, waste, or return
  some of your imports?
• Do you export previously imported materials?

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Is an FTZ right for You?
IF YOU ANSWER YES TO ANY OF THE FOLLOWING THEN
LOCATING IN AN FTZ CAN HELP.

• Do you have to wait long periods of time for your
  orders to get through border customs?
• Do you sell your imported products to companies
  that reside in Foreign Trade Zones?
• Are you selling to the military?
• Are you currently utilizing a Customs
  tariff-reduction program?

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FTZ Savings

• Derived exclusively from a tax management
  approach to U.S. Customs Duties and Fees.
• Realized in Four Ways
• - Customs Duty Elimination - Scrapping,
  Exports
• - Customs Duty Reduction - Inverted Tariffs
• - Customs Fee Reductions - Merchandise
  Processing Fees (MPF)
• - Deferral of Customs Duty Payment
  Inventory (a one time benefit usually the
  least profitable of the 3)

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Duty Elimination
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Duty Elimination
Assembled NewProduct B Exported Duty Free
EXPORT
ImportDuty Free
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Duty Elimination
Another FTZ
Military Bases
EXPORT Duty Free
ImportDuty Free
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Inverted Duty Rate
Final Product 5 Duty Rate
Component B 12 Duty
Manufacturing Process
Component A10 Duty
Component B 5 Duty
Component A5 Duty
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Merchandise Process FeesCompanies outside an FTZ
pay a .21 merchandise fee per shipment. The
minimum fee is 25.00 with the maximum being
485.00. The maximum is reached with a shipment
valued at 230,952.00. In an FTZ the company
lumps all shipments for a week into one filing
resulting in a 485.00/week maximum fee.
15 shipments/week 485 x 15 MPF 7275
Shipments into commerce
15 shipments/week 1 entry filed at end of week.
MPF 485
HIP FTZ
Shipments into commerce with weekly entry
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Deferred Duty
Received January
Shipped April
Improve Your Cash Flow
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One-Time Benefit Duty Deferral Explanation
Uncleared Merchandise
Cleared Merchandise
Distribution Center/Warehouse
Shipping
Duty paid on merchandise at time of clearance at
Customs port of entry
BEFORE FTZ OPERATIONS
UR Warehouse, Inc.
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One-Time Benefit Duty Deferral Explanation
Uncleared Merchandise
Cleared Merchandise
Distribution Center/Warehouse
Formerly duty-paid merchandise being shipped from
facility
Foreign merchandise admitted into FTZ noduties
paid at Customsport of entry. Shipping
duty-paid merchandise using FIFO inventory
record-keeping no duties paid at point of
shipment either.
DURING FIRST INVENTORY TURN OF ACTIVE FTZ
OPERATIONS
UR Warehouse, Inc.
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One-Time Benefit Duty Deferral Explanation
Uncleared Merchandise
Cleared Merchandise
Customs entry now made on merchandise which was
admitted into the Zone. Duty paid at this point.
Distribution Center/Warehouse
Distribution center full of uncleared merchandise
now.
AFTER FIRST INVENTORY TURN
UR Warehouse, Inc.
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Other Benefits

• Lower administrative costs.
• Lower security and insurance costs.
• No time constraints on storage.
• Shorter transit time direct delivery.
• Improved inventory control.
• Informed customs officer

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FTZ Cost/Benefit Analysis Warehousing
Distribution

• Benefits What you saveMerchandise Processing
  Fee Avoidance
• (10 shipments/wk at max.)
• .21 of value vs. 485/wk max. 226,980
  (EST)
• Deferred Duty Payment _at_ 7.5 19,000
• ____________________________________Total___
  245,980
• COSTS
• Brokers Fees Zone Operation v. Standard
  Clearance Process 0
• Operating Costs Change 0
• Security Administration 10,000
• Data Processing 5,000
• Duty Payments on Unexpected Up Adjustments
  5,000
• U.S. Customs Assurance Bond 1,000
• ____________________________________Total___
  21,000
• Net Benefit 224,980

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FTZ Cost/Benefit AnalysisManufacturing
Distribution

• Benefits What you saveDuty Rate Reduction
  (Inverted Duty) 400,000 (EST)Merchandise
  Processing Fee Avoidance .21 of
  value vs. 485/wk max. 18,000
• Deferred Duty Payment _at_ 7.5 19,000
• ____________________________________Total___
  437,000
• COSTS
• Brokers Fees Zone Operation vs. Standard
  Clearance Process 0
• Operating Costs Change 0
• Security Administration 10,000
• Data Processing 5,000
• Duty Payments on Unexpected Up Adjustments
  5,000
• U.S. Customs Assurance Bond 1,000
• ____________________________________Total___
  21,000
• Net Benefit 416,000