What does bonded mean, and how do Free Trade Zones, bonded warehouses and logistics centers differ?

What do “bonded” and “inside the border but outside customs territory” mean?

Taiwan’s Customs Act places bonded arrangements in Section 2 of Chapter 3, “Preferential Treatment of Duties”, but the law does not separately define the word “bonded”; instead it sets separate rules for bonded warehouses, bonded factories, logistics centers and duty-free shops. The shared idea is this: even though the goods have already entered Taiwan’s territory, as long as they remain inside a customs-controlled bonded site, import duties and taxes are not yet charged.

• Which date sets the tax rate: when the Customs Act or the tariff schedule is amended, the applicable rate is decided by the “date of application for import upon release from the warehouse” for goods stored in a bonded warehouse, and by the “date of application for import upon release from the logistics center” for goods stored in a logistics center (Enforcement Rules of the Customs Act, Art. 2).
• Exported means duty-free: Article 58 of the Customs Act provides that imported goods stored in a bonded warehouse that, within the prescribed storage period, are “exported in their original state or after reconditioning are exempt from duty”; for logistics centers (Art. 60), goods exported in their original state or after reconditioning or processing are likewise duty-free.
• “Inside the border but outside customs territory”: the Maritime and Port Bureau, MOTC uses this phrase to describe Free Trade Zones: an area marked off within the national border but outside the customs territory, where goods move in and out without customs duty; only when goods leave the area to be used or consumed in other taxable areas of Taiwan are customs duties collected and import controls applied.

When are taxes due as goods move in and out of a bonded area?

Taking a Free Trade Zone as an example, a shipment arriving from abroad can take two different routes, with completely different tax results:

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How do bonded warehouses, bonded factories, logistics centers and FTZs differ?

All four kinds of site follow the rule “no tax for now, tax only on entry into Taiwan’s domestic market”; the differences lie in how much processing they allow, how long goods can stay and the eligibility thresholds:

Which Free Trade Zones does Taiwan have?

According to the Customs Administration, Ministry of Finance (Taiwan) and the Maritime and Port Bureau, MOTC, Taiwan currently has 7 Free Trade Zones (six seaports and one airport). The seaport FTZs are managed by the Maritime and Port Bureau, MOTC, while the Taoyuan Air Free Trade Zone is under the Civil Aeronautics Administration, MOTC:

How big are the Free Trade Zones?

Table 24 of the Maritime and Port Bureau, MOTC’s Maritime and Port Statistics Yearbook for ROC year 114 (2025): at the end of 2025 the seaport Free Trade Zones had 85 enterprises in total, with full-year trade value of about NT$888.8 billion and trade volume of 7,020,000 metric tons; trade value rose 39.83% from 2024. The yearbook attributes the growth to higher storage and transshipment volumes of machinery, electrical equipment and their products.

• By port in 2025: the Port of Taichung was the largest at about NT$476.2 billion (29 enterprises), followed by the Port of Taipei at about NT$242.3 billion (8 enterprises) and the Port of Kaohsiung at about NT$168.4 billion (34 enterprises); the Port of Anping and the Port of Keelung recorded about NT$1.06 billion and NT$860 million respectively, and the Port of Su-ao had 1 enterprise with no value shown in the table.
• Taoyuan Air Free Trade Zone: the Civil Aeronautics Administration, MOTC reports that in Q1 2026 there were 34 FTZ enterprises in the value-added park, with Q1 trade value of NT$1,787.487 billion, up 85.81% from the same period of 2025.

Which taxes are waived in an FTZ, and when must tax be paid back?

Many articles only say “FTZs are exempt from customs duty”, but Article 21 of the Act for the Establishment and Management of Free Trade Zones exempts more than customs duty, and the exemptions come with conditions:

• What is exempt: goods that an FTZ enterprise brings into the zone from abroad for its operations are exempt from customs duty, commodity tax, business tax, tobacco and alcohol tax, the health and welfare surcharge on tobacco products, the trade promotion service fee and the commercial port service fee (Art. 21, para. 1).
• Self-use machinery and equipment: self-use machinery and equipment brought in from abroad are exempt from customs duty, commodity tax, business tax, the trade promotion service fee and the commercial port service fee (but not from tobacco and alcohol tax or the health and welfare surcharge on tobacco products), but are back-taxed if shipped to a taxable area within 5 years of entry (Art. 21, para. 2).
• Taxed when sold into Taiwan: when goods are shipped to a taxable area, the various taxes and fees are levied under import rules; for goods processed, manufactured or reconditioned in the zone, the dutiable value is assessed as the price of the goods in the form in which they are shipped out, minus the value added in the zone (Art. 23).
• Shipped to other bonded areas: the related taxes and fees are exempt under the rules for bonded goods (Art. 27).
• Profit-seeking enterprise income tax: Article 29 provides that a profit-seeking enterprise that engages only in preparatory or auxiliary activities in Taiwan, and that purchases, imports, stores or transports goods in the zone itself or through an FTZ enterprise, is exempt from profit-seeking enterprise income tax on income from selling those goods once approved by the management authority; this applies until 2042-12-31 (ROC year 131, December 31). This is income tax, a separate matter from import duties and taxes.

Do Science Parks and Technology Industry Parks also count as bonded?

Besides FTZs, several other kinds of park in Taiwan also have designated bonded scopes: enterprises in these parks are exempt from import duties and taxes, commodity tax and business tax on raw materials and similar goods imported from abroad, and those taxes are levied under import rules when the goods are shipped to a taxable area:

Can cross-border e-commerce use a bonded warehouse for “bonded import”?

It is often said online that “cross-border e-commerce sellers can stock goods in a bonded warehouse in advance and release them from the zone once consumers order, balancing speed and tax efficiency.” “Bonded import” is an institutional term from mainland China’s cross-border e-commerce; no bonded import system or pilot program designed specifically for cross-border e-commerce in Taiwan could be found on the websites of the Ministry of Finance, the Customs Administration or the Maritime and Port Bureau. Companies can store goods in a bonded warehouse or logistics center under the general rules, but every release from the warehouse to a taxable area must be declared and taxed under ordinary import rules.

• In Taiwan, goods moving from a bonded warehouse, logistics center or FTZ to a taxable area must all be declared and taxed under ordinary import rules (Bonded Warehouse Regulations Arts. 24 and 29; Logistics Center Clearance Regulations Art. 10; FTZ Goods Clearance Regulations Art. 6).
• Whether goods imported out of a zone can qualify for the NT$2,000 low-value duty exemption: this page found no explicit official provision, so it cannot be treated as an established practice.
• Operators of bonded sites must in principle be approved companies (bonded warehouses have exceptions such as government agencies and state-owned enterprises), and individuals cannot apply; bonded warehouses, bonded factories and logistics centers also have paid-in capital thresholds (see the comparison table above).
• Xu et al. (2019, Sustainability) compared two models in mainland China’s cross-border e-commerce, “stocking a bonded warehouse in advance” and “switching to single-parcel direct mail when out of stock”. It is only a theoretical model and Taiwan’s system is different, so it can only be used by analogy to explain the trade-offs between the two stocking approaches.

How do personal online purchases and consolidated parcels differ from bonded goods?

Items that individuals buy on platforms such as Taobao and Pinduoduo and ship back to Taiwan through consolidation or express services do not go through bonded procedures; they clear customs under the rules for express consignments, postal items or ordinary imports. Low-value express consignments (dutiable value of NT$50,000 or less) that are not subject to import regulation restrictions can clear customs by simplified declaration; from 2026-03-01, a customs declaration authorization must be completed before a simplified declaration (in writing, via the Customs-Port-Trade Single Window, or via the EZ WAY real-name authentication platform):

• NT$2,000 is a threshold, not an allowance: a consignment is duty-free only if its dutiable value (including freight and insurance) is NT$2,000 or less; above that, the entire consignment is taxed under the rules.
• 6 times per half-year: once the same taxpayer has used the low-value exemption for release more than 6 times within a half-year period (months 1–6 or 7–12), the exemption no longer applies; the remaining count can be checked on the Customs-Port-Trade Single Window through the “Frequent Import Records Inquiry (GB377)”.
• Goods excluded: tobacco and alcohol, and agricultural products subject to tariff quotas, do not qualify for the low-value exemption.
• Goods subject to permits or inspection: pharmaceuticals, health foods, fresh agricultural, fishery and livestock products, live animals and plants, protected wildlife and products made from them, etc. may not clear customs by simplified express declaration (reminder from Taipei Customs, Customs Administration, Ministry of Finance).
• From 2026-03-01: customs may decline to accept the declaration of an express consignment under simplified declaration if a customs declaration authorization has not been completed first (Regulations Governing Customs Clearance of Air Express Consignments and of Sea Express Consignments, amended 2026-02-23).

What does research say about how well Free Trade Zones work?

The studies below provide background; none of them were conducted on HowBridge, and they can only illustrate general principles:

• The bottlenecks of Taiwan’s FTZs are customs procedures and fragmented management: Chang et al. (2014, Maritime Quarterly) used the analytic hierarchy process to compare four dimensions (operations, personnel, processing and customs affairs) and found that the dimension most in need of priority attention was “customs affairs”, followed by “operations”; Yu et al. (2016, Maritime Quarterly) surveyed the six seaport FTZs and found that operators most wanted a fully working single window, simpler permit and inspection documents, and a single management authority; Huang et al. (2020, Journal of Marine Science and Technology) also listed “coordinating and unifying regulations” as one of three main improvement measures. All three are questionnaire or expert-opinion studies that reflect the views of operators and officials, not quantitative assessments of the zones’ performance.
• Operators look at administrative efficiency, not just tax exemptions: Chiu et al. (2011, The Asian Journal of Shipping and Logistics) surveyed multinational companies operating in Taiwan’s FTZs and found the five most valued factors were government administrative efficiency, low charges, simplified customs procedures, clear regulations and tax incentives; Hsu et al. (2021, Promet), taking the Port of Kaohsiung FTZ as a case and the foreign investor’s perspective, found that the areas most in need of improvement were access to raw materials, local government efficiency, political stability and social security. The post-entry performance gains in the former study are operators’ self-assessments based on relatively old data, and only show operators’ perceptions.
• Free trade zones work, but the effect depends on conditions: Wang (2013, Journal of Development Economics) compared mainland Chinese cities that set up special economic zones earlier and later, finding that the zones increased foreign investment without crowding out domestic investment, but that the later a zone was set up, the smaller its benefits; Frick et al. (2019, Economic Geography) used night-time light data across several emerging countries and found that zone growth is hard to sustain, and that proximity to large cities and large markets matters more than tax incentives. Neither study is about Taiwan, so they can only be used by analogy to show that “setting up a zone does not guarantee success”.
• “Bonded” means taxes are suspended, not that goods are legally offshore: Chiu (2020, master’s thesis, Executive Master of Business Administration program, National Taiwan University) compared Taiwan and Singapore, explaining that in bonded areas customs duty, business tax and so on are usually suspended or exempted, while a free trade zone is the most complete kind of bonded area, where processing, storage, testing, labeling, packaging and similar activities can take place; Shadikhodjaev (2011, World Trade Review) analyzed international rules and noted that the Revised Kyoto Convention treats free zones as having some “extraterritorial” character, whereas WTO law does not treat them that way. The former is an institutional comparison and the latter an international-law analysis; neither estimates the amount of tax saved.
• Bonded stocking and direct mail each have pros and cons: Xu et al. (2019, Sustainability) used a game-theory model to compare two models for cross-border import e-commerce, “stocking everything in a bonded warehouse in advance” and “switching to single-parcel direct mail when the bonded warehouse is out of stock”; the results show the hybrid model may increase the overseas supplier’s profit and reduce the e-commerce seller’s profit. This is a theoretical model set in mainland China’s cross-border e-commerce, not actual data; Taiwan’s import system is different, so it can only be used by analogy to explain the trade-offs between the two stocking approaches.

What are the common terms for bonded status and FTZs?

Bonded (customs duty suspended)

While imported goods are held in a customs-controlled bonded site, import duties and taxes are not yet charged; they are duty-free if exported, and declared and taxed under the rules when they enter Taiwan’s domestic market.

Inside the border but outside customs territory

An area marked off within the national border but outside the customs territory; goods move in and out without customs duty, and are taxed only when moved to other taxable areas of Taiwan.

Taxable area (domestic customs territory)

The ordinary areas of Taiwan outside the bonded areas; goods entering them must be declared and taxed under import rules.

FTZ enterprise

A business approved to engage in trade, warehousing, logistics, transit, processing, manufacturing and similar activities in a Free Trade Zone; it must be a company or a Taiwan branch of a foreign company.

Reconditioning

The inspection, testing, sorting, classification, splitting, assembly and repacking permitted in a bonded warehouse; the original nature or form of the goods may not be changed.

Logistics center

A bonded site registered with customs approval that runs storage, transshipment and distribution of bonded goods; it may carry out reconditioning and simple processing.

Deemed importation

When goods in a self-use bonded warehouse are sold to a business in the taxable area, their release from the warehouse is treated as an import, and they are declared and taxed in the form in which they leave the warehouse.

Dutiable value

The base price for calculating customs duty: the transaction value, including freight and insurance to the port of import.

What are the sources and the scope of verification?

The sources below were consulted on 2026-10-17; document dates are shown separately from the consultation date, and no date has been added where a source does not state one.

Official and primary government sources

• Act for the Establishment and Management of Free Trade Zones (MOTC / Laws and Regulations Database) | Document date: 2019-01-16; original text of Art. 3 definitions, Art. 17 notification and clearance, Art. 21 exemption from customs duty and six other taxes and fees (seven in total), and Art. 23 taxation of goods shipped to taxable areas
• Amendment history of the Act for the Establishment and Management of Free Trade Zones (Laws and Regulations Database) | Document date: 2019-01-16; shows the most recent amendment was on ROC year 108, January 16, changing only Art. 29, with no amendment since
• Customs Act (Ministry of Finance / Laws and Regulations Database) | Document date: 2022-05-11; Art. 58 bonded warehouses, Art. 59 bonded factories, Art. 60 logistics centers, Art. 61 duty-free shops, Art. 49, para. 2 low-value exemption, Art. 29 dutiable value including freight and insurance
• Enforcement Rules of the Customs Act (Ministry of Finance / Laws and Regulations Database) | Document date: 2024-12-23; Art. 2: when the tariff schedule is amended, the applicable rate for goods in bonded warehouses and logistics centers is decided by the date of application for import upon release from the warehouse (or logistics center)
• Regulations Governing the Establishment and Management of Bonded Warehouses (Ministry of Finance / Laws and Regulations Database) | Document date: 2026-07-20; Art. 34 scope and limits of reconditioning, Art. 45 two-year storage, Art. 24 goods in a self-use bonded warehouse sold to the taxable area are deemed imported, Art. 29 import on release subject to the ordinary duty-payment deadline
• General explanation of the amendment to the Regulations Governing the Establishment and Management of Bonded Warehouses, 115.07.20 (Ministry of Finance) | Document date: 2026-07-20; new in the past year: bonded warehouses may store goods transferred (or sold) by FTZ enterprises
• Regulations Governing Customs Administration of Bonded Factories (Ministry of Finance / Laws and Regulations Database) | Document date: 2026-06-12; Art. 40 domestic sales back-taxed on import duties and taxes according to the form on leaving the factory; key points of the ROC year 115 (2026) June amendment
• Regulations Governing Customs Clearance of Goods in Logistics Centers (Ministry of Finance / Laws and Regulations Database) | Document date: 2025-01-14; Art. 3 definition of logistics center and reconditioning and simple processing, Art. 10 clearance required for shipment to taxable areas, Art. 18 storage period in principle unlimited
• Regulations Governing Customs Clearance of Goods in Free Trade Zones (Ministry of Finance / Laws and Regulations Database) | Document date: 2025-05-09; Art. 6 goods shipped from an FTZ to a taxable area are declared by the taxpayer and handled under the import regulations
• Regulations Governing the Operation and Management of FTZ Enterprises (MOTC / Laws and Regulations Database) | Document date: 2024-10-16; Art. 2: an FTZ enterprise must be a company or a Taiwan branch of a foreign company
• Technology Industry Park Establishment and Management Act (formerly the Export Processing Zone Establishment and Management Act) (Ministry of Economic Affairs / Laws and Regulations Database) | Document date: 2023-01-19; Export Processing Zones renamed as of ROC year 110, March 28; Arts. 7 and 21 bonded goods shipped to taxable areas back-taxed in the same way as imports
• Science Park Establishment and Management Act (National Science and Technology Council / Laws and Regulations Database) | Document date: 2018-06-06; Art. 22 designation of bonded scope, Art. 23 raw-material exemption and taxation on shipment to taxable areas
• Agricultural Technology Park Establishment and Management Act (Ministry of Agriculture / Laws and Regulations Database) | Document date: 2026-02-04; Arts. 21 and 22 bonded scope; shows that agricultural technology parks and FTZs are governed by different laws
• Regulations Governing Customs Clearance of Air Express Consignments (Ministry of Finance / Laws and Regulations Database) | Document date: 2026-02-23; Art. 11 low-value duty-free express = dutiable value of NT$2,000 or less; Art. 17 from 2026-03-01 simplified declaration requires a prior customs declaration authorization
• Regulations Governing Customs Clearance of Sea Express Consignments (Ministry of Finance / Laws and Regulations Database) | Document date: 2026-02-23; sea express consignments clear customs in the dedicated sea express consignment zone, not through FTZ bonded status; the ROC year 115 prior-authorization rule
• Regulations Governing Customs Clearance of Imported and Exported Postal Items (Ministry of Finance / Laws and Regulations Database) | Document date: 2020-04-01; Art. 7 postal parcels with a dutiable value within NT$2,000 are exempt from customs duty, commodity tax and business tax
• Announcement of the duty-exemption limit under Article 49, paragraph 2 of the Customs Act (Ministry of Finance) | Document date: 2017-09-07; original text of the official announcement that an import consignment with a dutiable value of NT$2,000 or less is duty-free
• Directions for Customs Clearance of Goods in Logistics Centers (Customs Administration, Ministry of Finance) | Document date: 2026-01-20; new in the past year: clearance procedures for goods moving in and out between logistics centers and Free Trade Zones brought under the rules
• Which Free Trade Zones currently exist, and which customs office supervises each? (Customs Administration, Ministry of Finance) | Document date: 2026-07-06; the official list of the 7 Free Trade Zones and their supervising customs offices
• Overseas online shopping is easy, but watch out for frequent imports (Ministry of Finance) | Document date: 2024-10-01; the full criteria for the NT$2,000 low-value exemption and the limit of 6 times per half-year
• Rules to note for cross-border online shopping (Taipei Customs, Customs Administration, Ministry of Finance) | Document date: 2025-02-12; online purchases subject to permits or inspection may not use simplified express declaration
• FAQ: What is a Free Trade Zone? (Maritime and Port Bureau, MOTC) | Document date: 2026-10-13; the “inside the border but outside customs territory” concept and the six-seaport, one-airport list
• Taoyuan Air Free Trade Zone (Civil Aeronautics Administration, MOTC) | Document date: 2026-05-19; approval of preparation in ROC year 94, the operating license, and the number of enterprises and trade value for Q1 of ROC year 115
• ROC Year 114 Maritime and Port Statistics Yearbook, Table 24: Seaport Free Trade Zones (Maritime and Port Bureau, MOTC) | Document date: 2026-07; (published July 2026) in ROC year 114 the seaport FTZs had 85 enterprises, trade value of about NT$888.8 billion and trade volume of 7,020,000 metric tons

Research literature

What are common questions about bonded status and Free Trade Zones?

What does bonded mean?

How is bonded different from duty-free?

How many Free Trade Zones does Taiwan have?

Which taxes are waived in a Free Trade Zone?

How long can goods stay in a bonded warehouse?

Can goods be processed in a bonded warehouse?

Is a “bonded logistics center” the same as a logistics center?

Can individuals store their online purchases in a bonded warehouse to save tax?

Does Taiwan have bonded import for cross-border e-commerce?

Do Export Processing Zones still exist?

Do consolidated shipments from China to Taiwan pass through a Free Trade Zone?

Further reading