Freeports are a special kind of port where normal tax and customs rules do not apply. These can be airports as well as maritime ports. At a freeport, imports can enter with simplified customs documentation and without paying tariffs. Businesses operating inside designated areas in and around the port can manufacture goods using the imports and add value, before exporting again without ever facing the full tariffs or procedures.
If the goods move out of the freeport into another part of the country, however, they have to go through the full import process, including paying any tariffs.
Freeports are similar to free zones, or ‘enterprise zones’, which are designated areas subject to a broad array of special regulatory requirements, tax breaks, and government support.
The Prime Minister made Freeports a centrepiece of his election campaign in 2019, asserting that post-Brexit the UK’s rebirth of trading hubs will boost global trade, attract inward investment, and increase prosperity in otherwise deprived communities.
With significantly increased customs checks at UK ports announced by the government likely to impact on supply chains and drive up demand for more warehousing in a market that’s already close to full capacity, the lifting of restrictions of EU legislation creates a new opportunity to bring forward radical solutions.
A key positive is that Freeports need not be seaports but could include inland depots too. Hopefully, this puts large rail connected logistics parks in the frame, where there is ample development space for additional warehousing and distribution services to meet climbing demand for space.
Eight Freeports have been announced and we will see how they intend to operate in readiness for 2022 launch.
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