Free Zone

A designated area that receives special treatment through its exclusion from the area to which the country's normal customs rules apply. A free port is one at which imports may be landed without paying customs duties. Though free zones are often part of a tax incentive package in what would otherwise be a high tax jurisdiction, they may also be found in tax havens, e.g. Freeport in the Bahamas.

Since there is no need to pay and then reclaim customs duties, the system of free zones or free ports favours export processing, transshipment and the entrepot trade.