free warehouses are warehouses in which tax-free goods are kept awaiting sale or collection by owners
-Goods stored in these warehouses can be either locally produced, requiring no taxation or imported goods for which customs duties have already been paid.
NOTE: i) All warehouses apart from bonded warehouses are free warehouses since goods held in them are not subject to control by customs authorities. This includes all private and public warehouses
- Locally produced goods are stored in free warehouses since no custom duties are paid for them.
Advantages of free warehouses
- Owners of goods stored need not to pay any taxes, thus the goods cannot be auctioned for failure to pay customs duties
- It is cheaper to store goods in free warehouses as compared to bonded warehouses since there are no customs duties levied.
- Clearence of the goods from the warehouse is simple since a “release warrant” to prove payments of duties is necessary
- These warehouses are located at places that are convenient to users