Bonded Warehouse Applications -
Bonded Warehouse Applications
Bonded Warehouse and Foreign-Trade Zones (FTZ) are frequently used as duty saving devices. Miami and New Orleans are known as the gateway to both the South and Latin America, where merchandise from Asia is shipped through Miami or New Orleans, where it is then warehoused, and after that distributed, before being sent to its final destination in Latin America. In these situations, merchandise transiting through Miami and New Orleans via a bonded warehouse or FTZ does not incite customs duties and, as a result, it a duty savings device.
What is a Bonded Warehouse?
To put it simply, a Bonded Warehouse is a customs regulated warehouse that must comply with stringent CBP requirements. Currently, there exist 11 classes of bonded warehouses. To become a bonded warehouse, an entity must fill out a detailed application where rigorous background checks are applied and approved by U.S. Customs. Customs entry must still be filed for merchandise in or transiting through a bonded warehouse. After that, duties are deferred till goods technically enter the United States for consumption or duties are deferred altogether if the goods are exported.
What is a Foreign Trade Zone (FTZ)?
Foreign Trade Zones (FTZs), are areas that are within the geographic limits of the U.S. but are considered outside U.S. Customs territory. Foreign and domestic merchandise is admitted into the FTZ for operations such as exhibition, storage, assembly, processing, manufacture, redistribution, and more. Foreign Trade Zones (FTZs), are excellent tools that allow users to reduce, defer, or eliminate Customs duties.
What are the main differences between Bonded Warehouses and FTZs?
Foreign Trade Zones (FTZs), are viewed as being outside of U.S. Customs territory. Compared to a bonded warehouse which is considered to be within the U.S. Customs territory. With that said Customs entry is made at the time goods enter the bonded warehouse, but not the Foreign Trade Zone. Entry in regards to an FTZ is only made once the goods enter the U.S. for consumption. Moreover, the scope of authorized activities in a bonded warehouse is limited, depending on the class of approval one has. The bonded warehouse right also requires a Customs bond when merchandise is admitted to the bonded warehouse. Merchandise can remain in the Foreign Trade Zone for an unlimited period, but time in a bonded warehouse is limited to a period of not more than five years.