The March Joint Powers Authority is the grantee of Foreign-Trade Zone (FTZ) 244. Established in 2000, FTZ 244 operates under the alternative site framework and currently comprises the majority of western Riverside County (see map).
Foreign Trade Zone 244 Questionnaire
Please provide your answers to a brief questionnaire to help us determine whether your business may be able to take advantage of the cash flow benefits, reduction of U.S. Customs duty, or elimination of U.S. Customs duty in a Foreign Trade Zone.
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Deferral of Duties
Customs duties are paid only when and if merchandise is transferred into U.S. Customs and Border Protection territory. This benefit equates to a cash-flow savings that allows companies to keep critical funds accessible for their operating needs while the merchandise remains in the zone. There is no time limit on the length of time that merchandise can remain in a zone.
Elimination of Duties
No duties are paid on merchandise exported from a FTZ. Therefore, duty is eliminated on foreign merchandise admitted to the zone but eventually exported from the FTZ. Generally, duties are also eliminated for merchandise that is scrapped, wasted, destroyed, or consumed in a zone.
Elimination of Drawback
In some instances, duties previously paid on exported merchandise may be refunded through a process called “drawback.” The drawback law has become increasingly complex and expensive to administer. Through the use of a FTZ, the need for drawback may be eliminated, allowing these funds to remain in the operating capital of the company.
Labor, Overhead, and Profit
In calculating the dutiable value on foreign merchandise removed from a zone, zone users are authorized to exclude zone costs of processing or fabrication, general expenses, and profit. Therefore, duties are not owed on labor, overhead, and profit attributed to production in a FTZ.
An increasing number of firms are making use of the ability to transfer merchandise from one zone to another. Because the merchandise is transported in-bond, duty may be deferred until the product is removed from the final zone for entry into the U.S. Customs and Border Protection territory.
Additional benefits, sometimes referred to as intangible benefits, have begun to play a greater role in a company’s evaluation of the FTZ program. Many companies in FTZs find that their inventory control systems run more efficiently, thereby increasing their competitiveness. FTZ users also find that in meeting their FTZ reporting responsibilities to the U.S. government, they are eligible to take advantage of special Customs procedures such as direct delivery and weekly entry. These procedures expedite the movement of cargo, thereby supporting just-in-time inventory methodologies.
Foreign Trade Zone 244 Benefits
The FTZ program helps American companies improve their competitive position versus their counterparts abroad. The FTZ program allows U.S.-based companies to defer, reduce, or even eliminate Customs duties on products admitted to the zone. Please use the following worksheet to calculate “potential” savings: (download worksheet).
Reduction of Duties
In a FTZ, with the permission of the Foreign-Trade Zones Board, users are allowed to elect a zone status on merchandise admitted to the zone. This zone status determines the duty rate that will be applied to foreign merchandise if it is eventually entered into U.S. commerce from the FTZ. This process allows users to elect the lower duty rate of that applicable to either the foreign inputs or the finished product manufactured in the zone. If the rate on the foreign inputs admitted to the zone is higher than the rate applied to the finished product, the FTZ user may choose the finished product rate, thereby reducing the amount of duty owed.
Estimated Weekly Entry & Merchandise Processing Fee (MPF)
The Customs broker collects fees for preparing and filing each entry with U.S. Customs and Border Protection; Customs collects the MPF which is assessed (with a minimum of $25 and a maximum of $485) against each entry filed. The FTZ program allows consolidation from daily or per-container entries into weekly entries, often resulting in substantial savings.
By federal statute, tangible personal property imported from outside the U.S. and held in a zone, as well as that produced in the U.S. and held in a zone for exportation, are not subject to State and local ad valorem taxes.
U.S. quota restrictions do not apply to merchandise admitted to zones, although quotas will apply if and when the merchandise is subsequently entered into U.S. commerce. Merchandise subject to quota, with the permission of the Foreign-Trade Zones Board, may be substantially transformed in a FTZ to a non-quota article that may then be entered into U.S. Customs and Border Protection territory, free of quota restrictions. Quota merchandise may be stored in a FTZ so that when the quota opens, the merchandise may be immediately s hipped into U.S. Customs and Border Protection territory.