Free trade zone vs Bonded warehouse

Posted by Radhe
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There are two different types of warehouses to store goods when they are imported into or exported out of the Country. We know then as Bonded Warehouse and Free Trade Zone (FTZ) Warehouse

The facilities provided by both of them are similar, but they also have some differences. Firstly, the purpose behind each warehouse being developed, the things you can do with goods and limitations of storage capacity.

It depends on what the company is trying to achieve and what their goals and expectations are. One type of warehouse might be better than others. Let’s look at what makes a Bonded warehouse different from a Free Trade Zone warehouse.

Free Trade Zone (FTZ) Warehouse:

FTZs are secure regions that usually offer trade benefits such as zero custom duty and encourage foreign businesses to set up their local offices.  FTZs are usually outside of Customs Department’s supervision.

For instance, an independent authority is formed by the local government. This independent authority is responsible for developing and regulating free zones in the country.

In accordance with the monitoring agency, overseas and domestic products/merchandise may be moved into zones for operations, not otherwise prohibited by using the law, such as storage, exhibition, meeting, production, and processing. All zone activity must be done keeping in mind the best interest of supporting foreign trade while keeping the country’s policies in check.

Below the sector processes, the standard formal CBP entry approaches and bills of duties aren’t required on the overseas products until and until it enters CBP territory for domestic intake, at which point the importer generally has the choice of paying duties at the charge of either the unique overseas materials or the finished product.

 

Advantages of Free Trade Zone Warehouses:

  • Relief from inverted tariffs
  • Duty exemptions on re-exports
  • Duty elimination on waste, scrap, and yield loss
  • Customs duty exemptions on FTZ-to-FTZ transfers (e.g transfer from Doha Airport free zone to Hamad Seaport free zone)
  • Better quality control, compliance, and inventory tracking
    Indefinite storage of goods
  • A FTZ warehouse – Case to Case also permits assembly and testing, destruction, salvaging, processing, cleaning, mixing, relabeling, repackaging, and more.

JSL Qatar Freezone is a multi-country, transshipment and re-export hub with a community that supports various sectors such as FMCG, Pharmaceuticals, Fashion, Food & Beverage, Oil & Gas, and Construction industry, etc.

 

Bonded Warehouse

A Bonded warehouse or a Bond is a fortified distribution center in which imported dutiable product might be stored, processed, or assembled before the duty is paid. Duty can only be paid when the goods leave the warehouse for distribution.

When the products arrive at the warehouse, the office puts the product under a distribution center bond. This obligation will be dropped when the product is sent out, removed for provisions to a vessel or airplane, obliterated under the Customs department, or removed for utilization inside the country after the duty has been paid.

 

Advantages of using Bonded Warehouses: 

  1. Duty is not collected until the commodities are withdrawn for consumption.
  2. Until the duty is paid upon withdrawal by the merchandise, the importer, has control overuse of his or her money
  3. An importer can sell merchandise for exportation, thereby eliminating his obligation to pay duty in case if no domestic buyer is found for the imported goods.
  4. Charges owed on articles that have been exploited were determined at the time of withdrawal from the bonded warehouse.

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