What is bonded warehouse?
A warehouse authorized by Customs authorities for storage of goods on which payment of duties is deferred until the goods are removed.
A Bonded warehouse is a building or other secured area in which dutiable goods may be stored, manipulated, or undergo manufacturing operations without payment of duty. It may be managed by the state or by private enterprise. In the latter case a customs bond must be posted with the government. This system exists in all developed countries of the world.
Upon entry of goods into the warehouse, the importer and warehouse proprietor incur liability under a bond. This liability is generally cancelled when the goods are:
Exported; or deemed exported;
Withdrawn for supplies to a vessel or aircraft in international traffic;
Destroyed under Customs supervision; or
Withdrawn for consumption domestically after payment of duty.
A bonded warehouse is a duty free zone, akin to a port. It is usually fenced and has high security. The warehouse operator normally gives a ‘bond’ or more usually nowadays a bank guarantee (instead of a cash deposit in the old days) to customs to guarantee that there will be no loss of revenue to customs should any of the goods stored within be inadvertently released from the bonded area. In Malaysia, a license from customs is required before a public bonded warehouse can begin operations.
What are the benefits of Bonded Warehouse ?
The advantages of Bonded Warehouse:
1. By storing goods in a bonded warehouse, traders can enjoy substantial cost savings through the deferment of payment of tax if the goods are not immediately required when they arrive in the destination port.
2. Duty need not be paid on imported goods which are intended for reexport.
3. Duty need not be paid on goods which are produced in a Free Industrial Zone pending export if they are stored in a bonded warehouse.
Normally, when goods are imported into the free circulation of the European Union, Value Added Tax (VAT) and customs duties should be paid before the goods can be stored, waiting to be sold.
However, it is also possible to store the goods in a customs bonded warehouse, which results in a postponement for an indefinite period of customs duty/VAT at import. In this case, customs duties and VAT at import only need to be paid when the goods are actually imported into the free circulation of the EU.
If the client is located in a non-EU country, the goods can be transported under customs bond from the warehouse to the country where the buyer is located. Then, customs duties and VAT at import are subsequently paid in the country of destination.
Because the majority of the customs bonded warehouses in the Netherlands are administratively controlled, the number of physical checks by the Customs Department is reduced dramatically.
For example, the import can be carried out via EDI or via a diskette. Supplying customs with information this way allows them to do more detailed checks on the clearances as well as the mutations of the inventory. Physical checks are carried out at random and basically each logistics service provider is checked extensively only once every three years.
Under this type of scenario, it is possible to operate a European Distribution Center 24 hours a day, 7 days a week, 365 days a year.
While foreign companies can apply for a license to operate their own customs bonded warehouse, many companies outsource this type of storage to a logistics service provider.