Do you know what are customs duties? L&Y Tax Advisor explains custom duties definition as: The charges that a country’s customs officials levy on goods that are imported and sometimes even exported are known as customs duties. Usually, the price that is charged depends on the worth of the items.
A customs duty is also known as:
- Import duty
- Import tax
- Import tariff
- Tariff
Purpose of Customs Duties
The following two purposes define what are customs duties precisely:
- Raise income for local government
- Giving a market advantage to locally grown, produced goods that are not subject to import duties
Customs taxes can occasionally be implemented as a type of economic sanctions. This means that commodities coming from particular countries are subject to higher rates as a punishment.
What are Customs Duties in the United States?
Congress sets customs tariffs in the United States. The U.S. International Trade Commission publishes the Harmonized Tariff Schedule (HTS). It contains the rates for imported items.
The United States’ trading connection with the exporting country affects these rates. Special rates are available for impoverished countries or those involved in trade programs, while the general rate applies to countries with regular commercial ties.
Read: What is a VAT number in the US?
International Trade Agreements and Organizations
Organizations like the World Trade Organization (WTO) encourage countries to cut tariffs to promote free trade. It frequently serves as the driving force behind international attempts to reduce customs taxes.
In addition, trade accords such as the United States-Mexico-Canada Agreement (USMCA, previously NAFTA) among the United States, Canada, and Mexico have been instrumental in removing or decreasing customs taxes on particular goods, facilitating simpler cross-border commerce.
How to Calculate the Customs Duty?
A customs duty calculator helps you estimate customs duties tax. The import tarrif depends on the types of products you have imported. Therefore, always check the code of each product.
Paying Customs Duties
There are several documents needed to compute and pay customs taxes. These consist of:
- Bill of lading or airway bill to verify cargo data
- Commercial invoice for detailed value of goods
It is necessary to have a packing list and a certificate of origin. They will guarantee that the appropriate duty is levied according to the country of origin.
The Bottom Line
Knowing what are customs duties is essential because governments use them to control imports, safeguard homegrown businesses, and oversee trade agreements. Businesses involved in international commerce must comprehend these obligations to manage expenses and compliance efficiently.
Get in touch with our tax consultancy services for further assistance.
