Dancor Business Park Foreign Trade Zone Information
Foreign Trade Zones allow goods to be brought into Canada without the prepayment of duties or taxes. If the goods are re exported, no duties or taxes need ever be paid. Its FTZ capability provides a major competitive advantage for exporters using Canada as a base to serve the NAFTA marketplace. A Foreign Trade Zone allows storage of goods and value-added manipulation to take place in a tax and duty free environment without tying up excessive amounts of capital. Applicable duties and taxes are paid only if the goods enter the Canadian domestic market.
An Export Distribution Centre is Canada's version of a Free Trade Zone. Usually located near a port of entry, an EDC can be used to store foreign or domestic goods, re-package and re-furbish materials, assemble products, or manufacture and re export commodities without paying customs, duties and taxes. Merchandise can usually be held indefinitely within an EDC. An EDC is an all purpose storage or distribution space provided to users in general warehouse buildings. Usually it serves both occasional and long-term use.
Legislations and regulations
Bill C-13, was tabled in the House Of Commons Feb 20th 2001 and was given Royal Assent on June 14th 2001. The legislation's most important section makes it easier to set up an EDC in Canada, creating a new type of certificate allowing firms to buy goods for export without paying the G.S.T. The goods are classified as "zero rated" providing EDCs a cash-flow benefit not available to other exporters. Presently, exporters pay GST upfront and then apply for a reimbursement from Canada Customs and Revenue Agency. The prime qualifying criteria for an EDC applicant is to prove that at least 90% of its total revenue is derived from the export of inventory purchased in Canada and abroad. Canadian value added to foreign content may not exceed 20%.
EDC program application certificates can be obtained in English and in French
By locating in a Foreign Trade Zone / Export Distribution Centre, manufacturers can:
*Use Canada as a base for distributing products within the NAFTA economy;
*Improve cash flow by not paying duties up front;
*Reduce or eliminate duties on scrap or damaged materials;
*Avoid quota restrictions until the goods actually enter the Canadian market;
*Avoid inverted American and Global tariffs.
*Take advantage of economic incentives provided by governments.
Until recently, operating Foreign Trade Zones in Canada was complicated, burdened by paperwork, and limited to specific types of activities and firms. It did not allow value-added Canadian content. Under the new legislation, companies wanting access to the North American market through a Foreign Trade Zone can do so under the Export Distribution Centre Program.
