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business is cash flow. Many small busi- nesses have a great product, but they have misjudged the cash flow they need to have,” Cannon said. “So, let us say you have a million people who want to buy something you are crocheting out of yarn, but you do not have the yarn to make the product for those orders. With an FTZ, you get your yarn, you crochet your prod- uct and then you pay your tax later.”
FTZs can also reduce tariffs. For example, if you import an engine from Germany and leather from elsewhere, then use those components to make
a car within the FTZ, you will end up paying the duty for a car as opposed
to both the engine and the leather, Cannon explained. Or, in the exam-
ple of AstraZeneca, there is no duty
on pharmaceutical drugs ready for patient consumption, but there may
be duties on the components used to make the drugs. Because AstraZeneca is an FTZ site, “they will never pay if their
materials leave the facility in pill form,” Cannon said.
However, Cannon noted, companies operating within an FTZ always need to report to U.S. Customs and to the FTZ Board what the scope of their work is. If you are hoping to use FTZ benefits for a new product, you will need to report it.
Due to the strategic location of the FTZ around the Port of Wilmington, as well as Delaware’s other logistical advan- tages, such as the direct connection to I-95 and the relative lack of congestion compared to other East Coast markets, Cannon said, “Delaware is the ideal market to move your goods quickly.” «
A DETAILED EXPLANATORY VIDEO ON FTZ #99 CAN BE FOUND AT BUSINESS.DELAWARE.GOV/FTZ99
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