Common Types of Import Duty
Import duty is paid on certain commodities when they cross into a country or are released into free circulation, but did you know there are different types? Find out the most common in this article.
What is import duty?
Import duty is a tax that is levied on goods that are brought into the country from abroad. Unlike VAT, duty is not reclaimed during the normal course of business, so it should be accounted for in the cost of the goods when you are making your purchasing decisions.
Standard import duty
Usually determined as a percentage of the border value, standard or ‘all country’ import duty is payable when you are bringing goods in without any preferential treatment.
Border value refers to all of the costs that the goods have incurred to get to the border of import (IE value, freight, and insurance).
Some products, typically in the food sector, are charged a fixed amount of duty based on weight or quantity
Preferential duty rates are a reduction or elimination of the standard duty rate due to a trade agreement with the country of origin. Your country of origin can be found on the commercial documents; however, a certificate or proof of preferential origin will also be required to claim preference. Preferential duty rates are not applied automatically.
Additionally, your goods may qualify as originating from a country but not qualify for preferential origin. For example, if 40% of the parts in a car are from one area then there may be a majority origin applied, but the legislation may state that 50% is required to claim preference.
Speak to a customs consultant if you need help determining the origin.
“Dumping” refers to flooding the market of a foreign country with goods that are of lower value than the domestic standard, negatively affecting local businesses.
Anti-dumping duty refers to an additional duty, on top of the standard import duty, that brings the cost of the goods from some countries up to make it fairer.
There are a few ways to levy anti-dumping duty, but the most common is as a percentage of the value of the goods – the same as standard duty. Another way is to set a minimum price per piece, ensuring that the cost of any items is raised to meet this during import clearance.
Provisional anti-dumping duties may be applied during an investigation by authorities into a risk of circumvention (disguising the true origin by routing goods via another country) when that origin is not usually subject to anti-dumping duty. This will be confirmed to be definitive or lapsed following the end of the investigation, and the anti-dumping duty deposited may or may not be returned based on the result.
Countervailing duty is imposed on goods which have been subsidised in the country of origin. The application of countervailing duty uses the same principles as anti-dumping duty.
Safeguarding duties are imposed as an additional charge when goods are imported in quantities that could harm domestic industry.
For example, if there is so much foreign steel being imported that domestic manufacturers are selling into a saturated market – the safeguarding duty on imported products gives domestic manufacturers an advantage.
A quota is a set quantity of goods that can be imported at a lower-than-normal duty rate. A quota rate is not applied automatically but must be claimed. Many quotas work on a first come first served basis but in some cases, a licence may be required.
Quotas may be used in combination with preferential or safeguarding duties, to allow a certain amount of goods to be imported under preference or without the safeguarding duty. Once the quota is reached, importers must pay more duty on their imports.
Excise duty is an indirect tax raised on specific types of goods when they are imported or made available for consumption. It is designed to discourage their use so that they are not consumed or consumed in lower amounts. Examples of excise goods are alcohol, tobacco, and hydrocarbons.
The way excise is calculated depends on the commodity and may not relate to the net weight or the value of the goods. For example, alcohol excise can be charged based on the total volume of alcohol in the shipment combined with the strength and origin of the beverages.
Agricultural duty (EU only)
Agricultural duty is charged on products such as grains or flour and is calculated at a flat rate per tonne of net weight.
Need advice on the types of import duty you have to pay?
Customs Support is here for you. Operating out of 13 countries across Europe, we have the local expertise you need to know which type of import duty applies to your goods and country. Contact us for more information.