Definition of Customs Duty

Customs duty is a tax imposed by the government on imported or exported goods when crossing international borders. This duty is calculated as a percentage of the goods' value or as a fixed amount per unit, and aims to protect domestic industries and increase government revenues. Customs duty rates vary according to the type of goods, country of origin, and international trade agreements, and are usually paid before releasing goods from customs ports.

Types of Customs Duty

Customs duty varies according to calculation method, purpose, and trade policies followed, and includes:

• Specific Duties - Calculated as a fixed amount per specific unit of measurement such as kilogram, meter, or piece, regardless of the goods' value, and are usually used for homogeneous goods and raw materials

• Ad Valorem Duties - Imposed as a percentage of the customs value of goods, and are the most common because they are proportional to the goods' value and generate higher revenues for the government

• Compound Duties - Combine both previous types, including a fixed amount plus a percentage of the value, providing better protection for domestic industries

• Safeguard Duties - Imposed temporarily to protect domestic industries from harmful foreign competition and sudden increases in imports

• Anti-Dumping Duties - Applied to goods sold at prices below actual cost or below the price in the exporter's domestic market

• Preferential Duties - Reduced or exempted rates granted to friendly countries or within trade agreements and customs unions

• Punitive Duties - Imposed as economic sanctions on certain countries for political reasons or violation of international trade agreements

Methods of Calculating Customs Duty

Customs duty is calculated by different methods according to the type of goods and customs policy followed. The most common method is value-based calculation, where a percentage is applied to the customs value of goods, which includes the purchase price plus insurance and shipping costs until reaching the customs entry point.

The second method is specific calculation which depends on imposing a fixed amount per unit of measurement whether weight, length, number, or volume, and is usually used for homogeneous goods and raw materials. There is also the compound method which combines both previous methods, where both the fixed amount and percentage are applied, choosing the higher of the two or combining them together.

The calculation process is affected by many factors including country of origin, concluded trade agreements, goods classification according to the harmonized global system, in addition to exemptions and reductions applied to certain categories of goods or countries.

Responsibility for Paying Customs Duty and Payment Procedures

The responsibility for paying customs duty primarily falls on the importer or goods owner, and may be represented by a licensed customs agent or shipping intermediary in paying this duty. Duty must be paid before releasing goods from customs ports, and goods cannot be withdrawn without settling all customs dues owed on them.

Payment procedures are carried out by submitting the customs declaration with required documents and calculating the value of dues owed, then paying them in cash, certified checks, bank transfers, or through approved electronic systems. In some cases, payment deferral is allowed in exchange for providing bank guarantees or approved guarantees covering the value of dues owed.

The grace period for paying duty usually ranges between 15-30 days from the date of goods arrival, and in case of delay, daily fines and delay interest are imposed. Customs authorities also retain the right to sell goods by public auction to collect dues owed in case of non-payment within the legally specified period.

Goods Exempt from Customs Duty and Exceptions

Goods exempt from customs duty and applied exceptions differ from country to country according to local laws and regulations and followed economic policies. Each country determines its own list of exempt goods and required conditions and controls for obtaining these exemptions, which may include medicines, medical equipment, basic foodstuffs, educational equipment, and others according to each country's priorities.

Therefore, it is recommended to review the local customs laws and regulations of the concerned country to obtain accurate and updated information about exempt goods and required procedures.