If you're looking to cut the cost of importing goods, taking advantage of bonded warehouse options can be a great way to reduce your tax burden while also increasing your flexibility to import items in a way that best suits your business.

The duty relief offered by these solutions provides a number of advantages. However, they may not be suitable for every situation, so it's important you have a clear idea of what these offerings involve, how they work and what responsibilities you'll have when using them. Here are a few key things you need to know.

The benefits of a bonded warehouse

Many jurisdictions offer bonded warehouse schemes as part of their customs regime. Usually located near ports of entry, they allow importers to easily move and store goods. The key feature of a bonded warehouse is that, as long as goods are stored in it, they are not yet considered to have entered the country's market. This means that companies do not have to pay customs duties or VAT until the goods leave the warehouse.

So what are the benefits of this for importers? In practice, it lets them store items for a significant length of time - up to five years for most items - while deferring the payment of duties. 

This can allow companies more flexibility when it comes to arranging shipping and supply chain routes - meaning they can bring items closer to end consumers without having to worry about the effects of seasonal trends, for example.

It can also help businesses manage cash flow by releasing items from bonded warehouses incrementally, therefore removing the need to pay a large amount of customs taxes in one lump sum.

4 occasions when you can benefit from a bonded warehouse

So how can you take advantage of these special customs regimes in order to save money, improve the efficiency of supply chains and streamline processing operations? Here are four situations when a bonded warehouse may be the best option.

If you don't yet know your final destination or demand level

Bonded warehouse storage helps to account for seasonal fluctuations or uncertainties in exactly where your goods will end up. By holding products at these facilities until demand is high enough, or waiting to determine how best to distribute them within the destination market, you can react to evolving trends and get goods to consumers quickly without having to worry about customs duties in the meantime.

You're waiting on key documentation

Ensuring you have all the necessary paperwork for goods can be a complex process, especially for hazardous or restricted items. Utilizing bonded warehouses while these efforts are completed ensures you do not end up struggling with negative cash flow before they can sell goods on.

You're planning on re-exporting goods

Goods that are immediately reexported from bonded warehouses will not be subject to customs duties at all. Therefore, taking advantage of these facilities as an intermediary distribution hub allows you to make significant cost savings while keeping their supply chains secure. 

You need to do further processing

Bonded warehouse facilities allow for certain additional processing, such as repackaging, to take place on imported goods. This can help ensure they meet all requirements for a specific market and are processed closer to their end users without having to pay customs duties before the goods are ready for sale.