Foreign Trade Zone (FTZ)
The Foreign Trade Zone (FTZ) is a federal designation that allows businesses located within the zone to defer, reduce or eliminate payment of U.S. customs duties on imported goods held in the zone. The Port of Virginia holds the Grant of Authority for Foreign Trade Zone #20 serving Southeastern Virginia and Northeastern North Carolina. Foreign-trade zones are secure areas under supervision of U.S. Customs and Border Protection (CBP) that are considered outside the customs territory of the U.S. for the purposes of duty payment.
The Port of Virginia operates under Alternative Site Framework. This framework allows for simplified minor boundary modifications creating an opportunity for virtually any site in the City of Portsmouth to be added to the zone and offering nearly every company the opportunity to consider obtaining FTZ status.
The benefits of a company obtaining FTZ status include:
- Duty Deferral: Users can avoid paying duties on imported merchandise until the goods are removed from the FTZ and enter in the U.S. commerce. Duty on machinery is deferred until it is put into production; there is no duty paid on re-exports or scrap.Inverted Tariffs/Duty Reduction: FTZ users can pay lower duty rates on goods produced in the zone when the finished product has a lower duty rate than the imported component parts.
- Weekly Entries: Zone users will benefit if they file multiple Customs and Border Protection entries each week. FTZs allow the user to file this paperwork once a week at a rate no higher than $485.
- No Time Constraints: Merchandise may remain in the zone indefinitely, whether or not it is subject to duty.
- Customs Compliance: CBP requirements and federal criminal sanctions are deterrents against theft. Cargo that is imported into FTZs have fewer incidents of loss and may result in lower insurance costs.
For more information, contact the Port of Virginia at (757) 683- 2135, the U.S. Foreign Trade Zone Board at (202) 482-2862 or visit www.customs.gov.