What is a Free Trade Zone?

Do you want to know what a Free Zone is and what its advantages are for transport companies? Please keep reading and discover in this article what a Free Trade Zone consists of and its importance for the logistics sector.

It is well known that good physical connectivity is essential for economic growth. It is critical to the city and in rural areas and, of course, necessary to carry out transport and deliveries throughout the country.

What is a Free Trade Zone?


What is a Free Trade Zone


A Free Trade Zone is defined as a designated free trade zone in a particular zone or geographic area in which no taxes are imposed and is connected to a sea or an airport.

Free Trade Zones are also known as free trade areas and help promote transport, trade, and logistics, especially the import and export of all kinds of goods.

This is because, within a Free Trade Zone, no duties or taxes are charged since their reason for existence is to free companies from government restrictions and allow the free movement of goods.

In this way, Free Zones allow duty-free import and export of goods and guarantee the exemption of certain taxes (for example, import) and the exemption of some of them. 

These zones’ origin applies different norms on a fiscal, tributary, and customs legality from the rest of the commercial zones is not something new or current.

What do Free Zones mean for companies?

Some of the benefits that Free Zones provide is that they are areas that have tax advantages and that encourage companies to use free port zones from a financial, fiscal, investment, and regulatory point of view.

Trade barriers, regulations on banking transactions, and official requirements for employees are also lower within these zones.

Also, it has been the case that some free ports have adopted multimodal cargo handling as a new service option. Thus, they offer better services.

No duties or taxes are imposed in a free trade zone, or Free Zone contributes to promoting trade by removing all barriers.

The absence of barriers manages to attract companies from all sectors and encourages them to move to the free trade zone to carry out their business. This movement of industries usually attracts more industries and services.

A Free Zone optimizes the movement of goods between the different countries in the zone and offers the opportunity to ensure imports from third countries.

All this means that companies can relocate their entire production line in the Free Zones, which guarantees considerable savings in the transport and export of goods to other countries.

Not only that, but the benefits are also produced. For example, a company can move its production facilities to another country and import the resulting goods into the free zone without paying customs duties or taxes.

Thus, a business can have its goods produced in any country, import them tax-free into the free zone, and then export them tax-free again.

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