Free Trade Zone vs Bonded Warehouse
Compare Free Trade Zones (FTZ) and Bonded Warehouses: benefits, restrictions, and when to use each for cross-border trade.
Zone Overview
Free Trade Zone (FTZ)
Designated area where goods can be imported, stored, processed, and re-exported without paying customs duties until goods enter domestic market.
Pros
- ✓Duty deferral until entry to market
- ✓Manufacturing/processing allowed
- ✓Re-export without duty
- ✓Streamlined procedures
Cons
- ✗Limited geographic locations
- ✗Regulatory complexity
- ✗Setup costs
- ✗Restricted domestic sales without duty payment
Best for: Re-export hub, manufacturing for export, duty optimization
Cost: Varies by zone; leasing + service fees
Setup: Confirm timing with the operator or competent authority
Bonded Warehouse
Secured warehouse where imported goods are stored without paying duties. Goods can be repackaged, sorted, and labeled before entering domestic market.
Pros
- ✓Duty deferral
- ✓Goods storage without duty
- ✓Repackaging/sorting allowed
- ✓More locations than FTZ
Cons
- ✗No manufacturing allowed
- ✗Time limits
- ✗Security requirements
- ✗Must pay duty before domestic sale
Best for: Import storage, consolidation, delayed customs clearance
Cost: Warehousing fees + customs supervision
Setup: Confirm timing with the operator or competent authority 2-6 weeks
FAQ
Can I sell goods from a bonded warehouse domestically?+
Yes, but you must pay import duty and VAT before the goods can enter domestic circulation. The advantage is you can store goods duty-free while waiting for buyers, then pay duties only when selling.