Freeports are set to unleash a range of new opportunities for ambitious companies to grow and develop. These are secure customs zones that are located at ports where business activity can be carried inside a country’s territory but where different customs rules apply.
Providing significant tax benefits, reduced red tape, enhanced infrastructure and opportunities for innovation, they are designed to promote trade and investment across the wider region.
One of the tax benefits offered by freeports is the potential for duty inversion. What is it and how can your business take advantage of it?
What is duty inversion?
Duty inversion refers to a trade situation where the import duty on a component is lower than the duty levied on the finished product. In effect, this means that if the duty on a finished product is lower than that on the component parts, a company could profit by importing duty-free components. They could then manufacture the final product in the freeport, and then pay the duty at the rate of the finished product when it enters the UK’s domestic market.
This can allow UK manufacturers the opportunity to access cheaper component parts from overseas suppliers driving down their manufacturing costs overall and developing new opportunities. This could help UK manufacturers become more competitive in a global marketplace while encouraging manufacturing activity overall.
How can your business use duty inversion?
Manufacturing businesses that are inside the freeport can benefit from cheaper imported components in comparison to those outside the area. Businesses that are already operating within the freeport will be able to take advantage of duty inversion.
It’s sometimes wrongly believed that freeports just refer to the port, but this isn’t the case. The Liverpool City Region Freeport will be a designated area covering 45km. In the freeport region, a range of economic incentives will be in place covering business rates, planning, regeneration, customs, innovation, trade and investment.
If you’re looking to develop your manufacturing business and currently rely on imported components that are subject to duty, then being located within a freeport region will have distinct benefits. Using measures such as duty inversion, it’s hoped that freeports will drive job creation and regeneration across their region.
Our role at Liverpool City Region Freeport
SSO International Forwarding will be playing an integral role at the Liverpool City Region Freeport. Freeport customs sites are run by an operator who will be responsible for the security of the site and keeping records about goods moving in, around and out of the site.
Having successfully applied to be the freeport’s first Customs Site Operator, SSO International Forwarding will now operate a designated customs site from a brand new 50,000 square feet secure warehouse in Haydock. The new site has easy access to the M62 and M6, as well as Liverpool and Manchester airports, and the Port of Liverpool.
Contact us to find out more about freeports, duty inversion and our role as a Custom Site Operator