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The U.S. Foreign-Trade Zones (FTZ or Zone) program was created by the FTZ Act of 1934, in order to “expedite and encourage foreign commerce” in the United States. By definition, an FTZ is a government-designated site where foreign and domestic materials remain in a kind of international commerce limbo. While the goods remain in the Zone, the materials may be stored, manipulated, mixed with domestic and/or foreign materials, used in assembly or manufacturing processes, or exhibited for sale without triggering the payment of U.S. Customs and Border Protection (CBP) duties and excise taxes.

Imports may flow directly into the Zone and be held there indefinitely duty free. Duty is assessed only when those goods are shipped out of the Zone and into the United States marketplace. However the most important new benefits are those that result in supply chain efficiencies and velocity improvement, while cutting costs from the Supply Chain. In Arizona, and within no other state, there is a tax benefit tied to the real estate and property taxes that all real property, machinery and equipment pays in Arizona. The FTZ “re-classification” under Arizona State Law allows for any property in a Zone that is both approved and activated, to be re-classified down from 20% valuation to 5% valuation (this is a 75% reduction in taxable value). Therefore, Zone users, tenants, owners, and Zone Operators who locate inside an approved FTZ site, and activate the site, receive a discount on their taxes of 75% annually. This savings is approximately $0.84 per foot (annual) savings over a competing building, all other things being equal!

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