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