Bonded warehouses are secure storage facilities that allow importers or manufacturers to store their goods, such as cigarettes, under bond.
There are several reasons why a bonded warehouse is needed for cigarette trade: duty deferment: cigarette manufacturing involves the payment of excise tax, which is usually paid at the point of production.
By storing cigarettes in a bonded warehouse, importers or manufacturers can defer the payment of excise tax until the goods are released into the local market. quality control: bonded warehouses provide a controlled environment that helps to preserve the shelf life and quality of cigarettes.
Cigarettes are often stored in temperature-controlled warehouses to ensure that they remain fresh and retain their flavor.
Duty exemption for re-exports: when cigarettes are stored in a bonded warehouse, they can be re-exported without having to pay excise tax. this is especially useful for companies that operate in multiple countries and need to move their products around without incurring taxes.