What are Bonded Warehouses?

Bonded warehouses are warehouses in which dutiable goods may be stored without paying the duties on them. For importers, there are a number of advantages to using this type of storage, which makes them a popular option in many ports all over the world. Different governments have different laws about how such warehouses can be administered and who can use or operate one.

Also known as a customs warehouse, a bonded warehouse acts sort of like a no man's land where goods can be deposited without an importer or an agent needing to pay duties on them. If the importer decides to sell the goods for re-export, duties will not be incurred. Likewise, if the goods are destroyed, the obligation to pay duties will also be resolved. If the imported goods are released for sale, however, customs duties will come due.

Importers often appreciate the flexibility of such warehouses, as if they can't get a good price for goods domestically or can't sell them at all, they can sell them for re-export without having to worry about the duties that might already have been paid. Paying duties on arrival can also be expensive, and using a bonded warehouse allows importers to access funds from the sale to pay the duties, rather than having to pay duties in advance. Customs officials also use them to store impounded or confiscated goods while working out what is going to happen to them, thereby ensuring that people don't pay duties on goods they cannot use.

Some warehouses are operated by a government, while others are run by third parties that contract out their warehouse space. In some cases, they may take on the responsibility for paying duties, while in other instances, the importer or agent who arranges for the storage is responsible. Import/export companies may maintain their own storage space for the convenience of themselves and their clients, especially if they do a great deal of business.

Individuals who want to open bonded warehouses generally need to file applications with the customs agency in the nations where they intend to operate warehouses. The application process can be complex and lengthy, and some people choose to contract it out to a lawyer who is experienced in such issues. In addition to meeting customs requirements, operators may also need to meet requirements set by the port where they operate, including providing evidence of insurance, installation of security systems, and measures to prevent loss due to fire or contamination.