What is customs duty & why do governments charge it

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What is customs and why do governments charge it?

  • Every country levies a tax on goods that are bought into the country using an indirect tax called Customs Duty.
  • Customs duty can be interpreted as a punitive tax aimed at discouraging people from importing goods outside of their country when they can source it within their country or a way of protecting local industries.
  • It can also be interpreted as means of protecting native industries that produce the same or similar goods
  • It could also be a result of a trade agreement between trading block or countries belonging to a regional or international body such as the EU or SADC.

Can you avoid it?

  • In general no, unless the goods have been purchased at the port or airport and are classified or have been declared duty free.

Can you pre-determine duty to be charged?

  • Most governments publish widely the applicable tariffs for duty payable; the published tariffs can be used as a guide only to work out a potential duty which might be due.
  • The actual duty payable can only be determined once the goods have arrived at the destination and customs officials have examined the goods.

Is in other words there is no way that duty is predetermined?

  • Yes, there is no way to pre-determine duty since duty to be paid as it is dependent on the valuation of customs officials and the classification of goods imported as well its quantities and weights and the cost of freight and insurance to its final destination

How is Duty Calculated?

  • Calculation of Customs duty depends on the determination of what is called assessable value in case of items for which the duty is levied ad valorem. This is often the transaction value unless the Customs officers determine assessable value in accordance with Brussels definition.
  • However, for certain items like petroleum and alcohol, Customs duty is realized at a specific rate applied to the volume of the import or export consignments.
  • Assessable value is usually based on percentage of the cost of the goods imported plus the cost of freight and insurance to its final destination.
  • For the purpose of assessment of Customs duty, products are given an identification code that has come to be known as the Harmonized System  This code was developed by the World Customs Organization based in Brussels. H. S. Code may be from four to ten digits.

Where can I find information about general published tariffs that can be used as guidelines?

  • Most customs tariffs are online on government websites of many different countries such as UK, South Africa, Zambia and Zimbabwe.
  • Embassies and consulates are also sources of information on customs tariffs

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