FTZ is an abbreviation for Foreign Trade Zone and is a federal government program designed to promote awareness and access to the Free Trade programs in Canada.
In April 2016, the Niagara Region became the first Ontario FTZ. Niagara was chosen as an FTZ because of our strategic advantages:
- Proximity to the US border (we have 3 international truck crossings, rail, water and airport access)
- Centralized Ontario Location
- Supporting infrastructure
- Diverse clustering of existing industry that can take advantage of the program
Though Free Trade programs are available across Canada, Niagara’s FTZ offers a strategic benefit to qualifying businesses by:
- Reducing paperwork
- Diminished geographic restrictions
- Improved cash flow
- Lowered operating expenses
- Supporting operational efficiencies in a global supply chain
- Giving a competitive advantage in the global market
So, what are the program?
There are 5 programs that businesses can access.
- Customs Bonded Warehouse
- This is a CBSA (Canadian Border Services Agency) program which allows good to stay in bond for up to 4 years before either having to enter Canada, ship to another country or be destroyed.
- Goods may be disassembled, reassembled, displayed, inspected, labelled, packed, stored and/or tested
- Companies can also remove a sample of the goods to solicit orders for goods or services
- Any duties and taxes are only paid for the goods when they leave the bonded space
- Duties Relief Program
- Companies may qualify if they
- Store goods before releasing them for sale into the Canadian marketplace
- Import goods and later export them without substantially altering them
- Use imported goods in the production of other goods for export
- Companies may qualify if they
- Drawback Program
- This program is similar to the Duties Relief Program and covers the recover of duties and taxes that have already been paid
- Export Distribution Centre Program
- Companies who use this program import goods and/or acquire the goods in Canada to add limited value and then export the value-added goods to customers outside Canada
- If a company qualifies for the program, they do not have to pay GST/HST on most imported goods or on domestic purchases of goods worth $1000.00 or more. To qualify, a company must:
- Have at least 90% of the operations for the fiscal year be commercial activities
- Have at least 90% of the business revenue for the fiscal year come from export sales
- You only add limited value to your customer’s goods that you import or take possession of in Canada during the fiscal year
- Exporters of Processing Services Program
- This program relieves participants of the obligation to pay GST/HST on imports of goods belonging to non-residents provided that these goods are imported for processing, distribution or storage and are subsequently exported.
Like most good things in life, we must work to get the benefit. These programs can be intimidating as the regulations and paperwork may seem overwhelming.
That is where we can help.
CanadaBW Logistics is in Niagara’s FTZ and is an active participant on the FTZ Taskforce. We understand the complexities of the programs and can direct you towards what will be the most benefit for your business.