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A First for Fort Lauderdale and Our Country!

The 1st Ever Recreational Marine Foreign Trade Zone in the U.S. – in Fort Lauderdale!

 

In 2016, the Foreign Trade Zone (FTZ) Board and the City of Fort Lauderdale FTZ 241 granted the Marine Industries Association of South Florida (MIASF) approval to establish a 16-site marine industry subzone. This created the first ever recreational marine FTZ in the United States!

 

FTZ is a federal program that modifies U.S. Customs duties on products imported into the U.S. These areas are considered to be outside the U.S. Customs territory, so any foreign or domestic material moved into an FTZ is not subject to U.S. Customs duties.

 

What does this mean for businesses that choose to take part in the program? It means they are able to defer, reduce, or even eliminate Customs duties on foreign products.

 

Merchandise of every description may be held in the zone without being subject to tariffs (customs duties) and other ad valorem taxes (taxes based on the assessed value of an item). This tariff and tax relief is designed to lower the costs of U.S.-based operations engaged in international trade and thereby create and retain the employment and capital investment opportunities that result from those operations.

 

The new zones also allow several benefits to yacht owners looking to sell their vessels to U.S. buyers, or to have them repaired or upgraded by marine industry craftsmen in South Florida.

                                                    

  • Previously the Foreign Trade Zones were solely reserved for ports, holding zones for import and export, and "Duty free" stores. Now, with the subzones, foreign flagged vessels are able to be shown for sale to U.S. citizens without paying the import duty within these zones.

 

  • Additionally, major yacht refit projects can also benefit because duties on all imported parts can be deferred while vessels are in the zone. After the work is completed, the vessels may depart the U.S. without being required to pay duties or taxes.

 

This is great news for Broward County, as the FTZ designation makes the upcoming Fort Lauderdale Boat Show the only one in the U.S. where FTZ transactions can take place.

 

The estimated economic impact of the marine industry in Broward is $8.9 billion and we need to protect it the best we can by keeping our “yachting capital of the world” and “refit and repair capital of the world” status.

 

Lauderdale Marine Center was the first Foreign Trade Zone to activate, followed by Bahia Mar Marina and Pier Sixty- Six Marina. Back in 2017, when the program was still very new to the industry, the South Florida Business Journal sat with Megan Lagasse Washington, currently the Marine Director for Pier-Sixty Hotel and Marina, who worked for the RCI Group at Bahia Mar Marina at that time. They asked her important questions on how this will affect the industry – excerpts of that conversation are as follows.

What has changed since these marinas were designated as foreign trade zones? 

Foreign-flagged vessels could not be shown for sale in U.S. waters, unless the duty was paid on the vessel. The vessel needed to be imported and a 1.65 percent duty paid to sell, just like any other goods. (Duties vary by item.) No foreign-flagged vessels could be “for sale” and cruising in U.S. waters unless imported. The same goes for new foreign-flagged vessels for sale: the broker would have to pay the duty to get the vessel imported in order to show it for sale to U.S. residents.

So that means foreign importers save 1.65 percent tax paid on the entire price of the yacht? For instance, if the yacht is $1 million, the broker doesn’t have to pay $16,500 duty just to show it? The 1.65 percent was on the value of the yacht to import it, yes.

Is there a catch? Now foreign-flagged vessels can check into the FTZ and be shown to U.S. citizens without paying duty on the vessel. The vessel gives up their cruising license in order to do so, because the intention is to sell the vessel, not cruise.

What does it mean when a vessel has to give up the cruising license? Foreign-flagged vessels must get a cruising license in order to “cruise” U.S. waters. With the FTZ, the intention is to sell the vessel, not cruise the U.S. waters, so it must surrender its cruising permit to sit in the FTZ. All foreign-flagged vessels must tell customs their intention when checking into the U.S. It is the same as if you were going to a foreign country. You have to state your intention to customs upon arrival to wherever you are going. You only get a certain amount of days in that country and need to tell them when you are leaving. It is the same with the yachts.

Does that mean that a potential buyer can’t take the yacht out for a spin before buying it? No. With the FTZ, the buyer can take the boat for a sea trial, “a little spin,” by submitting paperwork that tells customs what they are doing. If the new owner wants to cruise U.S. waters, they will have to apply for a cruising permit through customs and exit the FTZ.

In what ways do you think this will help the South Florida economy? The more vessels that stay in the U.S., the more money they will bring to South Florida. This is in all aspects: dockage, vessel maintenance, crew staying in South Florida, which leads them to shopping at our stores, eating in our restaurants, etc. Also, if the vessels are being shown to U.S., citizens they may choose to flag their vessel U.S., which also leads to a greater positive impact on the U.S. economy. 

Posted by: Marine Advisory Committee @ 10:00:00 am  Comments (0)
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