Blog: What are freeports in Post Brexit plans? – Business Live

Freeports are designated zones where the normal tax and tariff rules of the country do not apply.

In these ports, goods can be imported, manufactured and re-exported without being subject to customs checks, paperwork, or import taxes, known as tariffs.

For the domestic market, tax and tariffs will only be payable at the point of sale.

Companies operating in the zone have the benefit of tax relief, such as reduced VAT, for the purchase of land and lower rates of employment tax.

The core customs and tariff benefit proposals:

  • Duty suspension – No tariffs, import VAT or excise to be paid on goods brought into a freeport from overseas until they leave the freeport and enter the UK’s domestic market.
  • Duty inversion – If the duty on a finished product is lower than that on the component parts, a company could benefit by importing components duty free, manufacture the final product in the free port, and then pay the duty at the rate of the finished product when it enters the UK’s domestic market.
  • Duty exemption for re-exports – A company could import components duty free, manufacture the final product in the freeport, and then pay no tariffs on the components when the final product is re-exported.
  • Simplified customs procedures – the Government intends to introduce streamlined procedures to enable businesses to access freeports.

But critics argue they simply defer the point when import tariffs are paid, which then still need to be paid at some stage.

And Labour has raised concern the ports could be used by counterfeiters and tax dodgers without scrutiny from customs and excise.

Seaports and airports can apply for freeport status.

The Government says it wants freeports to boost trade, jobs and investment by streamlining customs processes, speeding up planning processes to accelerate development and housing delivery and consulting on a set of tax breaks to support businesses.

The plan is a cornerstone of the Government’s plan to ‘level up’ opportunity across the country, geared towards areas of greatest need.

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