Understanding Customs Duties

Customs duties are taxes levied by a government on goods imported from another country. They serve to protect domestic industries, generate revenue, and regulate trade. The duty amount depends on several factors:

  • HS Code classification: The Harmonized System code determines the applicable duty rate
  • Country of origin: Trade agreements (FTA) can reduce or eliminate duties
  • Customs value: Usually CIF (Cost + Insurance + Freight) or FOB
  • Destination country: Each country sets its own tariff schedule

Common Import Taxes

  • Customs Duty: Based on HS code — ranges from 0% to 60%+ depending on product
  • VAT / GST: Value-added tax applied on top of (CIF + duty). Rates: US (none federal), UK 20%, EU 19-27%, India 18%, Australia 10%
  • Excise Duty: Additional tax on specific goods (alcohol, tobacco, fuel, luxury items)
  • Anti-dumping Duty: Extra duty on goods sold below fair market value
  • Countervailing Duty: Offset subsidies given by foreign governments