Killeen approves ‘Foreign Trade Zone’ designation for local chem plant; chopping off tax revenue
Dongjin Semichem Texas, a chemical manufacturer, is in the process of seeking a Foreign Trade Zone designation. That designation would allow the company’s Killeen location to be treated as though it is outside the United States customs territory for duty and customs entry purposes. That would allow the company to avoid or delay paying some taxes and fees along with letting it streamline some processes and procedures.
If it was approved for the designation, it would join Foreign Trade Zone 183, which includes Austin, Round Rock and other cities in Central Texas.
“Foreign Trade Zones can provide benefits in attracting new companies to a community,” Barry Albrecht, president of the Greater Killeen Chamber of Commerce and Economic Development Corporation. “When manufacturers buy components from other countries and then manufacture their product and sell it in the United States, they delay paying certain tariffs until the product is sold.”
The designation would not require the manufacturer to pay fees on imports until they leave the Foreign Trade Zone area for a domestic destination. If imports are brought directly to the plant and then exported directly from it, the company would not have to pay at all, since they would have never entered the U.S. customs territory.
It would also carry an inventory tax benefit. If Dongjin Semichem is approved for the designation, the city of Killeen would stop collecting approximately $35,000 in tax revenue from it on inventory tax yearly based on 2024 numbers. Bell County and the Killeen Independent School District would also lose their portion of inventory tax revenue.
This discount represents a small amount of the tax paid by Dongjin Semichem. For example, in property tax alone, the company paid about $800,000 to the various taxing entities in 2024, according to the Tax Appraisal District of Bell County. The company is one of the largest taxpayers in Bell County.
For Dongjin Semichem to receive the designation, all three taxing entities that would be losing revenue must confirm that they have no objection to the application. On Tuesday, the Killeen City Council voted 5-0 in favor of doing that as part of its consent agenda. Following those three entities approving the request, Dongjin Semichem must also get approval from the U.S. Foreign Trade Zone Board and U.S. Customs. If approved, it would be the first Foreign Trade Zone designation a property in Killeen has ever received.
Foreign Trade Zones were created by an act of the U.S. Congress in 1934; they were designed to make the U.S. a more desirable location for businesses to operate out of.
Aside from the aforementioned benefits, all other local, state and federal laws still apply to the zone. Retail trade is prohibited in the zone and nobody is allowed to reside there.
Dongjin Semichem’s Killeen location is on Rickey Carlisle Drive in the Killeen Business Park. It first announced it would be opening late in 2022. The South Korea-based company operates about 20 manufacturing plants across China, Korea and Europe. It employs more than 1,800 people across the globe. In Killeen, it started with 17 jobs and planned to add about two dozen more following it receiving a $2.4 million grant from the state of Texas earlier this year.
The company specializes in manufacturing semiconductor materials, which are needed for most modern electronic goods, and products used to create renewable energy devices.