FTZ vs. Bonded Warehouse

While a Foreign Trade Zone (FTZ) can offer great benefits and substantial savings to a company, we understand that the program may not be right for everyone. Many times, dependent on the operations that need to take place, a U.S. bonded warehouse may fulfill the needs of a company, while in other cases, an FTZ may bring considerable savings. To have a better understanding of which program is best to use, below are some of the major differences between an FTZ and a bonded warehouse.

  Foreign Trade Zone (FTZ) Bonded Warehouse
Customs Entry No entry required Entry required to admit goods into warehouse
Permissible Cargo Foreign and Domestic Goods Foreign goods only
Duties Only upon entry into the U.S. market Owed prior to release of goods from the bonded warehouse
Inventory Tax Foreign goods not taxed All goods are taxed
Storage Period Unlimited May not exceed five years
Control of Goods FTZ controls goods CBP controls goods
Domestic Goods May be admitted May not be admitted
Permissible Activity Clean, repack, sort, destroy, grade, label, assemble,
manufacture, exhibit, and co-mingle with other freight
 (foreign and domestic)
 Clean, repack and sort under CBP supervision
Manufacturing Permitted Not permitted
Waste Duty is only paid on items leaving the FTZ into U.S.
market for consumption
 Duty is due on all waste and/or damaged goods