Import Duty - Definition
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Import Duty Definition
When goods are purchased from abroad and imported into a country, a type of tax is charged on the goods, this is called the import duty. An import duty refers to the tax an importer pays on the goods being shipped or transported into a country, the customs authorities of the countries charge import duty. The worth of the goods being imported determine the amount that will be charged as import duty. Also, import duty can have different names depending on the context in which the term is being used, it can be called an import tax, customs tariff and import tariff.
A Little More on What is an Import Duty
Import duty is a federal tax charged by customs authorities on goods imported into a country. In the United States, import duties are established by the congress. The rates for different types of imports is listed by HTS (Harmonized Tariff Schedule) and published by the USITC (International Trade Commission). There are two specific reasons for establishing import duties, one if to raise funds for government projects and to also place value on local or domestic goods. In the United States, there are general rates for import duties, there are also different rates depending on the country from which the goods are being exported. International Organizations In a bid to promote free trade among many countries of the world, diverse international organizations and treaties have attempted to reduce import duties on goods imported into countries. As stimulated by the World Trade Organization, member countries are encouraged to cut tariffs on imported goods and also make room for healthy negotiations. Aside from the effort of WTO to reduce import duties, the North American Free Trade Agreement (NAFTA) also made an effort to cut import tariffs between the countries that signed it, these countries are Canada, the United States, and Mexico. Furthermore, 12 nations belonging to the Pacific Rim also signed the Trans-Pacific Partnership (TPP) as an effort to reduce or eliminate import duty. This was done in 2016.
Real World Example
In many countries, import duties are charged when the goods being imported into the country reach the border. At this period, the owner of the goods is required to file a document containing the list of goods being imported before he proceeds to make payment. In the U.S, imported goods are filed by the owner or purchaser at the port of entry and import duty is paid. The amount to be paid depends on the goods and the rates given by HTS. The customs authorities use HTS to charge import duties on goods, in most cases, owners and purchasers do not understand the classification of goods to realize the rate. However, the rates for import duties are published by the United States International Trade Commission (USITC). KEY TAKEAWAYS Here are vital points to know about import duty;
- Import duty is otherwise called import tariff, import tax and customs duty (tariff).
- Countries of the world charge import duty on goods being imported into the country.
- The Congress of the United States established import duties in the U.S.
- Import duties generate income for government and also give domestic products an edge over foreign or international goods.