A bonded warehouse is a storage facility for imported items awaiting customs clearance or goods waiting to be exported.
With a bonded warehouse, you can delay duties and taxes until goods are approved for sale or export. You can also generate early sales income from within the warehouse while postponing customs payments.
In essence, a bonded warehouse provides a duty-free zone. It also offers flexibility regarding shipments before final clearance.
To elaborate on why this is possible. It works because the warehouse owner first takes on the responsibility for duties instead of the importer. If the goods are later sold domestically, the owner pays the duties owed. However, no duties are due if the goods are exported or remain in storage.
This arrangement provides flexibility for importers by postponing duties until the final destination of the goods is determined.
A bonded warehouse is best suited for import/export business. It is often located close to ports and airports since customs officials work at borders when goods move between countries.