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Four Ways Apparel Companies Can Save Through Foreign Trade Zones

When we talk about how Foreign Trade Zones are full of easy ways for apparel companies to save — we’re not talking about the money you’ll save when an FTZ helps you improve your speed-to-market and get those fantastic faux-fur fedoras in front of those customers who’ve been “looking for something exactly like this for months!” Nor the money you could save by dodging the need to charge higher prices to make up for the duties you could have avoided at customs with a little bit of smart FTZ-related supply chain management. Nor the savings often not reaped by companies who end up hiring an extra gaggle of attorneys to help sort through the opaque legalese fog that governs the messy world of import laws.

We’re talking cold, hard, measurable cash not sent to the government via import duties or inventory taxes or fees — savings better spent investing in new equipment or hiring new staff or developing a new product line or buying that gold-plated company surfboard everyone's been eyeing (it's up to you).

FTZs are just giant swimming pools of savings for apparel companies. So dive in.

Here are four ways to save instantly:

No State or Local Inventory Taxes in Foreign Trade Zones

Basically, certain states, counties and municipalities levy inventory taxes. But since FTZs are essentially considered to be outside U.S. Customs territory, FTZs are considered to also be outside state and local tax jurisdictions, exempting you from most inventory taxes.

No Re-Export Duties in Foreign Trade Zones

Let’s say you wanted to import your fashion product to the U.S., add value to it, and promptly ship it off to be sold again in a foreign country, without an FTZ you’d have to pay import duties. But if all the work is done on it within the FTZ, it can be shipped off again without ever being considered to have entered the U.S.

No Waste, Scrap or Yield Loss Duties in Foreign Trade Zones

Similarly, let’s say you import a bunch of raw or unfinished material, and then promptly cut them up into nice pairs of pants (leaving lots of scrap behind). Without an FTZ, you’d pay duties on the entire block of bulk material. But if the finishing work is done inside an FTZ, you only pay duties on the final product. Throw the scraps away un-taxed.

No Entry Inefficiency Costs in Foreign Trade Zones

Each load you import takes time and effort to process. Weekly Entry Savings procedures let you basically file only one Customs Entry each week, simplifying the import process and improving your apparel supply chain management.

Posted: 1/25/2012 3:48:12 PM by Global Administrator | with 0 comments


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