Customs:
Customs is an authority or agency in a country responsible for collecting and safeguarding customs duties and for controlling the flow of goods including animals, transports, personal effects and hazardous items in and out of a country. Depending on local legislation and regulations, the import or export of some goods may be restricted or forbidden, and the customs agency enforces these rules.[1] The customs authority may be different from theimmigration authority, which monitors persons who leave or enter the country, checking for appropriate documentation, apprehending people wanted by international arrest warrants, and impeding the entry of others deemed dangerous to the country. In most countries customs are attained through government agreements and international laws.
A customs duty is a tariff or tax on the importation (usually) or exportation (unusually) of goods. In the Kingdom of England, customs duties were typically part of the customary revenue of the king, and therefore did not need parliamentary consent to be levied, unlike excise duty, land tax, or other forms of taxes.
Commercial goods not yet cleared through customs are held in a customs area, often called a bonded store, until processed. All authorized ports are recognized customs area.
Customs procedures for arriving passengers at many international airports, and some road crossings, are separated into Red and Green Channels.[2][3] Passengers with goods to declare (carrying items above the permitted customs limits and/or carrying prohibited items) should go through the Red Channel. Passengers with nothing to declare (carrying goods within the customs limits only and not carrying prohibited items) can go through the Green Channel. Passengers going through the Green Channel are only subject to spot checks and save time. But, if a passenger going through the Green Channel is found to have goods above the customs limits on them or carrying prohibited items, they may be prosecuted for making a false declaration to customs, by virtue of having gone through the Green Channel.[edit]Red and Green Channels
Canada and the United States do not officially operate a red and green channel system, however some airports copy this layout.
Airports within the EU also have a Blue Channel. As the EU is a customs union, travellers between EU countries do not have to pay customs duties. VAT and Excise duties may be applicable if the goods are subsequently sold, but these are collected when the goods are sold, not at the border. Passengers arriving from other EU countries should go through the Blue Channel, where they may still be subject to checks for prohibited or restricted goods. In addition, limitations exist on various tobacco and alcohol products being imported from other EU member states and use of the Blue Channel if those limitations are being exceeded would be inappropriate. Luggage tickets for checked in luggage within the EU are green-edged so they may be identified.[4][5] UK policy is that entry into a particular Channel constitutes a legal declaration.
[edit]Privatization of customs
Customs is an important part of the government involved in one of the three basic functions of a government, namely, administration, maintenance of law, order and justice and collection of revenue. However, in a bid to mitigate corruption, many countries have partly privatized its Customs. This has occurred by way of engagement of Pre-shipment Inspection Agencies who examine the cargo and verify the declared value before importation is effected and the nation Customs is obliged to accept the report of the agency for the purpose of assessment of leviable duties and taxes at the port of entry. While engaging a preshipment inspection agency may appear justified in a country with an inexperienced or inadequate Customs establishment, the measure has not really been able to plug the loophole and protect revenue. It has been found that evasion of Customs duty escalated when pre-shipment agencies took over.[6] It has also been alleged that such involvement of such agencies has been causing delays in the shipment process.[1] Privatization of Customs has been viewed as a fatal remedy.[6]
[edit]Summary of basic custom rules
[edit]Asia
[edit]Hong Kong
Hong Kong is a free port and generally does not impose duties on imported or exported goods, with the exception of liquors, tobacco, methyl alcohol and hydrocarbon oil.[7][8] Residents leaving the territory with a valid Hong Kong Identity Card for 24 hours or more may import up to 1 litre of alcohol and 19 cigarettes or 15 cigars.[9]
[edit]Indonesia
No customs for mailed goods below or equal to US$50. Customs policy may be different in Batam free trade zone.
[edit]European Union
The basic customs law is harmonized across Europe. This includes customs duties and restrictions. Customs tax from 150 €. In addition, see regulations of each Member State.
[edit]Germany
From 22 € is VAT payable. National restrictions especially in weapons and drugs.
[edit]Georgia
No customs for mailed goods below or equal to 300GEL (App US$160) including transportation. See currency exchange rate at National Bank of Georgia Web site: http://www.nbg.gov.ge/.
[edit]Romania
Customs may be very strict, especially for mailed goods (from outside the EU). Up to 10€ goods/package there are no taxes (it is free). Taxes may be stiff. There may be an outgoing custom tax too.[citation needed]
[edit]Slovakia
Up to 22€ there are no taxes (it is free). From 22€ up to 150€, it is necessary to pay VAT (DPH in Slovak) which is 21%. From 150€ it is necessary to pay VAT and customs. Customs may be from 0 to 10%, the amount depending on the type of imported goods.
[edit]North America
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[edit]USA
- US citizens and permanent residents are normally entitled to a duty-free exemption of $800 while foreign citizens are entitled to a $100 exemption
- Special provisions apply when a person is importing alcohol, tobacco, or other restricted goods
ATA Carnet
The ATA Carnet is an international customs document that allows the holder to temporarily (up to one year) import goods without payment of normally applicable duties and taxes, including value-added taxes. The Carnet eliminates the need to purchase temporary import bonds. So long as the goods are re-exported within the allotted time frame, no duties or taxes are due. Failure to re-export all goods listed on the Carnet results in the need to pay the applicable duties. Failure to remit those duties results in a claim from the foreign customs service to the importers home country.
The acronym ATA is a combination of French and English phrases "Admission Temporaire/Temporary Admission."
According to the International Chamber of Commerce (ICC), in 2008, about 165,500 Carnets were issued internationally. They covered goods valued at almost US$ 20 billion.
Bonded warehouse
A Bonded warehouse is a building or other secured area in which dutiable goods may be stored, manipulated, or undergo manufacturing operations without payment of duty.[1] It may be managed by the state or by private enterprise. In the latter case a customs bond must be posted with the government. This system exists in all developed countries of the world.
Upon entry of goods into the warehouse, the importer and warehouse proprietor incur liability under a bond. This liability is generally cancelled when the goods are:
- Exported; or deemed exported;
- Withdrawn for supplies to a vessel or aircraft in international traffic;
- Destroyed under Customs supervision; or
- Withdrawn for consumption domestically after payment of duty.
While the goods are in the bonded warehouse, they may, under supervision by the customs authority, be manipulated by cleaning, sorting, repacking, or otherwise changing their condition by processes that do not amount to manufacturing. After manipulation, and within the warehousing period, the goods may be exported without the payment of duty, or they may be withdrawn for consumption upon payment of duty at the rate applicable to the goods in their manipulated condition at the time of withdrawal. In the United States, goods may remain in the bonded warehouse up to five years from the date of importation.[2] Bonded warehouses provide specialized storage services such as deep freeze or bulk liquid storage, commodity processing, and coordination withtransportation, and are an integral part of the global supply chain.
Carnet de Passage
The Carnet de Passages en Douane (CPD) is a customs document that identifies a driver's motor vehicle. It is required in order to take a vehicle into a significant but diminishing number of countries around the world.
Cochin Duty Free
Cochin Duty Free is the retail arm of Cochin International Airport, operating duty free shops in International terminal as well as duty-paid shopping arcade in domestic terminal of Cochin Airport, Kochi. It was the first large scale duty free shop brand outside government owned ITDC Duty free which used to be operating in most of Indian Airport.[1] Currently one of the most profitable duty free units in the country.
Customs Modernization Act
The Customs Modernization Act (Pub.L. 103-182, 107 Stat. 2057, December 8, 1993), formally Title VI of the North American Free Trade Agreement Implementation Act, commonly known as the "Mod Act", amended the Tariff Act of 1930 and related laws. The Mod Act has been described as the most sweeping regulatory reform legislation since the U.S. Customs Service (now Customs and Border Protection, or "CBP") was organized in 1789 and it has become a benchmark for customs authorities around the world.[1] The Mod Act introduced two new customs concepts known as "informed compliance" and "shared responsibility." These concepts are premised on the idea that in order to maximize voluntary compliance with Customs laws and regulations, the trade community needs to be clearly and completely informed of its legal obligations. Accordingly, the Mod Act imposes a greater obligation on Customs to provide the public with improved information concerning the trade community's responsibilities and rights under Customs and related laws. In addition, both the trade and Customs share responsibility in carrying out import requirements.
Customs racketeering
Customs racketeering, a form of piracy, is the act of customs agents seizing cargo on ships for their own gain but claiming that they have the legal right to do so. Customs racketeering was a big problem mainly during the pre- and post- American Revolutionary years, which caused numerous conflicts between the United States and Great Britain.
Customs valuation
Customs Valuation is the process where customs authorities assign a monetary value to a good or service for the purposes of import or export. Generally, authorities engage in this process as a means of protecting tariff concessions, collecting revenue for the governing authority, implementing trade policy, and protecting public health and safety. Custom duties, and the need for customs valuation, have existed for thousands of years among different cultures, with evidence of their use in the Roman Empire, the Han Dynasty and the Indian sub-continent. The first recorded customs tariff was from 336 in Palmyra, an oasis city in the Syrian desert.[1] Beginning near the end of the 20th century, the procedures used throughout most of the world for customs valuation were codified in the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade (GATT) 1994
Customs area
A customs area is an area designated for storage of commercial goods that have not yet cleared customs. It is surrounded by a customs border. Most international airports and harbours have designated customs areas, sometimes covering the whole facility and including extensive storage warehouses.[1][2]
While territorially part of the country of the customs authorities, goods within the customs area have not technically entered the country yet, and may later be subject to customs duties. The goods within the area are also subject to checks regarding their compliance with local rules (for example drug laws andbiosecurity regulations), and thus may be impounded or turned back. For this reason, the customs areas are usually carefully controlled and fenced.
The fact that goods are technically still outside the country of the customs area also allows easy transshipment to a third country without the need for customs checks or duties.
Customs union
From Wikipedia, the free encyclopedia
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A customs union is a type of trade bloc which is composed of a free trade area with a common external tariff. The participant countries set up common external trade policy, but in some cases they use different import quotas. Common competition policy is also helpful to avoid competition deficiency.
Purposes for establishing a customs union normally include increasing economic efficiency and establishing closer political and cultural ties between the member countries.
It is the third stage of economic integration.
Customs union is established through trade pact.
Every Economic union, Customs and monetary union and Economic and monetary union has also a Customs Union[edit]List of customs unions
Agreement | Date (in force) | Recent reference |
|---|---|---|
| Andean Community (CAN) | 1988-5-25 | L/6737 |
| East African Community (EAC) | 2005-1-1[1] | WT/COMTD/N/14 |
| Customs Union of Belarus, Kazakhstan and Russia | 2010-07-1[2] | |
| EU — Andorra | 1991-7-1 | WT/REG53/M/3 |
| EU — San Marino | 2002-4-1 | |
| EU — Turkey | 1996-1-1 | WT/REG22/M/4 |
| Israel — Palestinian Authority | 1994[3] | |
| Southern Common Market (MERCOSUR) | 1991-11-29 | WT/COMTD/1/Add.17 |
| Southern African Customs Union (SACU) | 1910[4] | WT/REG231/3 |
| Switzerland — Liechtenstein | 1924 |
Additionally the autonomous and dependent territories, such as some of the EU member state special territories, are sometimes treated as separate customs territory from their mainland state or have varying arrangements of formal or de-facto customs union, common market and currency union (or combinations thereof) with the mainland and in regards to third countries trough the trade pactssigned by the mainland state.[5]
[edit]Proposed
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- 2010 Common Market for Eastern and Southern Africa (COMESA)
- 2010 Southern African Development Community (SADC)
- 2011 Economic Community of Central African States (ECCAS)
- 2012 Gulf Cooperation Council (GCC)[6][7]
- 2015 Arab Customs Union (ACU)[8]
- 2015 Economic Community of West African States (ECOWAS)
- 2019 or before Union of South American Nations (UNASUR)
- 2019 African Economic Community (AEC)
- ca 2020 Closer Economic Relations of Australia and New Zealand
- Central American Common Market (CACM) [9]
[edit]Defunct
- Customs and Economic Union of Central Africa (UDEAC) - superseded by CEMAC
- 1925 French Customs Union over occupied Territory of the Saar Basin
- The former Zollverein
- Custom Union Between Lebanon and Syria [10]
- Customs Union of the Commonwealth of Independent States (CIS) and its proposed successor in the framework of Eurasian Economic Community (EurAsEC)[11]
Customs war
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A Customs war, also known as a toll war or tariff war, is a type of economical conflict between two or more states. In order to pressure one of the states, the other raises taxes or tariffs for some of the products of that state. As a reprisal, the latter state may also increase the tariffs.
One of the latest toll wars happened in 1920's and 1930's between the Weimar Republic and Poland. The earlier state, led by Gustav Stresemann wanted to force Poland by creating an economic crisis to give up its territory and increased the tolls for coal and steel products developed there. As a reprisal, the Poles increased toll rates for many German products. This led to fast development of the port of Gdynia, which was the only way Poland could export its goods to Western Europe without having to transport them through Germany.
In September 1922 the Fordney-McCumber Tariff (named after Joseph Fordney, chair of the House Ways and Means Committee, and Porter McCumber, chair of the Senate Finance Committee) was signed by President Warren Harding[1]. In the end, the tariff law raised the average American ad valorem tariff rate to 38 percent.
Trading partners complained immediately. Those injured by World War I said that, without access by their exports to the American market, they would not be able to make payments to America on war loans. But others saw that this tariff increase would have broader deleterious effects. Democratic Representative Cordell Hallsaid, "Our foreign markets depend both on the efficiency of our production and the tariffs of countries in which we would sell. Our own [high] tariffs are an important factor in each. They injure the former and invite the latter."
Five years after the passage of the tariff, American trading partners had raised their own tariffs by a significant degree. France raised its tariffs on automobiles from 45 % to 100 %, Spain raised tariffs on American goods by 40 %, and Germany and Italy raised tariffs on wheat.[2]. This customs war is often cited as one of the main causes of the Great Depression.
To avoid customs wars which are considered harmful to the world's economy, the World Trade Organization was created.
[edit]
Douane
Douane commonly refers to one of two agencies:- the French customs and excise agency, the Directorate-general of customs and indirect taxes (French: La Direction générale des douanes et droits indirects (DGDDI))
- the Dutch Tax and Customs Administration (Dutch: Belastingdienst)
Douanes were a system of taxation through custom duties in France in King Louis XIV's reign. In the singular, it is also the French and Dutch word for customs in the sense of a border check.The term is derived from the Mughal title dewan (also diwan or divan), held by the chief revenue officer of a province, via the chiefly Bengali term diwani, denoting the right to collect an excise tax on imported goods.
Duty (economics)
In economics, a duty is a kind of tax, often associated with customs, a payment due to the revenue of a state, levied by force of law. It is a tax on certain items purchased abroad.[1] Properly, a duty differs from a tax in being levied on specific commodities, financial transactions, estates, etc., and not on individuals; thus it is right to talk of import duties, excise duties, death or succession duties, etc., but not of income tax as being levied on a person in proportion to his income.
Customs duty
Customs duty is a kind of indirect tax which is realized on goods of international trade. In economic sense, it is also a kind of consumption tax. Duties levied by the government in relation to imported items is referred to as import duty. In the same vein, duties realized on export consignments is called export duty. Tariffwhich is actually a list of commodities along with the leviable rate (amount) of Customs duty is popularly understood as Customs duty.[edit]Calculation of Customs duty
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 determines 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.[edit]H. S. Code
For the purpose of assessment of Customs duty, products are given an identification code that has come to be known as the Harmonized System code. This code has been evolved and assigned by the World Customs Organization based in Brussels. H. S. Code may be from four to ten digits. For example 17.03 is the H. S. Code for molasses from the extraction or refining of sugar. However, within 17.03, the number 17.03.90 stands for "Molasses (Excluding Cane Molasses)".Introduction of H. S. Code in 1990s has largely replaced what used to be known as SITC or Standard International Trade Classification, though SITC remains in use for statistical purposes. In drawing up the national tariff, the revenue departments often specifies the rate of Customs duty with reference to the H. S. Code of the product. In some countries and customs unions, 6-digit HS codes are locally extended to 8 digits or 10 digits for further tariff discrimination: for example the European Union uses its 8-digit CN (Combined Nomenclature) and 10-digit TARIC codes.[edit]Customs department
Main article: CustomsThe national authority that is entrusted the task of realizing taxes on international trade is often referred to as Customs department. Normally the Customs department operates under a national law and is authorized to examine the cargo in order to ascertain actual description, specification volume or quantity, so that the assessable value and the rate of duty may be correctly determined and applied.[edit]Evasion of Customs duty
Main articles: Tax avoidance and Tax evasionEvasion of Customs Duties takes place mainly in two ways. In one, the trader under-declares the value so that that the assessable value is lower than actual. In a similar vein, a trader can evade Customs duty by understatement of quantity or volume of the product of trade. Evasion of Customs duty may take place without or in collaboration of Customs officials. Evasion of customs duty does not necessarily constitute smuggling.[edit]Duty-free goods
Duty-free is the term that is often used to describe goods bought at ports and airports that do not attract the usual government taxes and customs duties. Some countries impose allowances in order to restrict the number of Duty-free items that one person can import into the country. These restrictions often apply to tobacco, wine, spirits, eau de toilette, gifts and souvenirs. Often foreign diplomatsand UN officials are entitled to Duty-free goods. Duty-free goods are imported and stocked in what is called Bonded warehouse.[edit]
Duty-free shop
Duty-free shops (or stores) are retail outlets that do not apply local or national taxes and duties. Duty-free shopping is a bit of misnomer though because shoppers may still have to pay duties in their home country on items purchased from a duty-free shop. They are often found in the international zone of international airports, sea ports or on board passenger ships. They are not as commonly available for road or train travelers, although several border crossings between the United States and Canada have duty-free shops for car travelers.These outlets were abolished for travel within the European Union in 1999, but are retained for travelers whose final destination is outside the EU. They also sell to intra-EU travelers but with appropriate taxes. Some special member state territories such as Åland, Livigno and the Canary Islands, are within the EU but outside the EU tax union, and thus still continue duty-free sales for all travelers.
European Customs Information Portal (ECIP)
The European Customs Information Portal (ECIP) [1] is a service for business operators, in particular SMEs, in all Member States importing goods into and exporting goods from the EU, such as carriers, forwarders, importers and exporters. It was launched by the European Commission and provides information on the rules to follow for EU imports, exports and transit. The first stage of ECIP focuses on the Safety and Security Amendment to the Community Customs Code [2] which entered into force on 1 July 2009.The customs portal constitutes a single point of access to relevant and practical information on transporting goods into and out of the EU and includes animated scenarios to explain each step of the import, export and transit procedures. It also outlines the legal framework for such procedures and covers information (such as policy information, databases and assistance services) taken from Commission and Member States’ customs websites. In addition, business operators can find useful links to online business databases like the online customs tariff TARIC [3] and the VAT Information Exchange System (VIES) [4], eLearning courses [5], as well as Member State helpdesk services [6].ECIP was developed together with Member States and representatives from trade associations and will be further extended in the future to cover other areas and provide more in-depth information on customs procedures.
European Union Customs Union
The European Union Customs Union is a customs union which consists of all the Member States of the European Union (EU) and a number of surrounding countries.The customs union is a principal task of the European Economic Community, established in 1958. No customs are levied on goods travelling within the customs union and—unlike a free trade area—members of the customs union impose a common external tariff on all goods entering the union. One of the consequences of the customs union is that the European Union has to negotiate as a single entity in international trade deals such as the World Trade Organisation.
Immigration tariff
An immigration tariff is a charge levied on immigrants wanting permanent residency within a nation. As a means of applying price theory to a nation's immigration policy, it is generally advocated as an alternative to existing bureaucratic procedures as a means of moderating or better regulating the flow of immigration to a given level.The idea is frequently associated with American economist Gary Becker, who stated, "When I mention this to people, they sometimes go hysterical.
Import Surtaxes
Import Surtaxes (Import Surcharge), also known as special tariffs, which is an extra tax after the normal import tax of imported goods levied by importing countries,.But the extra tax is for some purposes. Import Surtaxes is different from import duty,which is not reflected in the customs tariff, and is set for a specific purpose. It often depends on their level of taxation which is the specific purpose for collection. It is usually temporary or one-off.[edit]The purpose of setting import Surtaxes
1.To meet the balance of payments crisis, to maintain balance between imports and exports. The United States happens the first trade deficit in 1970’s. Nixon administration in order to meet the balance of payments crisis, they implement the “new economic policy” and announced the levy of foreign imports 10% of all import surcharges;2.Prevent dumping of foreign goods.3.Discrimination against a particular country or retaliation. Thus import surcharges, also known as special tariffs.[edit]
Morrill Tariff
The Morrill Tariff of 1861 was an American protective tariff law adopted on March 2, 1861 during the Buchanan Administration and signed into law by President James Buchanan, a Democrat. The act is named after its sponsor, Representative Justin Morrill of Vermont, who drafted it with the advice of Pennsylvania economist Henry C. Carey. Passage was possible because many low-tariff Southerners had left Congress after their states declared their secession. The Morrill Tariff raised rates to protect and encourage industry and the high wages of industrial workers. It replaced the lowTariff of 1857, which was written to benefit the South. Two additional tariffs sponsored by Morrill, each one higher, were passed during Abraham Lincoln's administration to raise urgently needed revenue during the Civil War.The high rates of the Morrill tariff inaugurated a period of continuous trade protection in the United States that lasted until the Underwood Tariff of 1913. The schedule of the Morrill Tariff and its two successor bills were retained long after the end of the Civil War.
Specific rate duty
A specific rate duty is a tariff levied on imports, defined in terms of a specific amount per unit, such as cents per kilogram. By contrast, an ad valorem duty is a charge levied on imports defined in terms of a fixed percentage of value.
Tariff
A tarrif is a tax levied on imports or exports. The word is derived from the Arabic word taārif, meaning 'fees to be paid.'
History
Tariffs are usually associated with protectionism, a government's policy of controlling trade between nations to support the interests of its own citizens. For economic reasons, tariffs are usually imposed on imported goods.In the past, tariffs formed a much larger part of government revenue than they do today.When shipments of goods arrive at a border crossing or port, customs officers inspect the contents and charge a tax according to the tariff formula. Since the goods cannot continue on their way until the duty is paid, it is the easiest duty to collect, and the cost of collection is small. Traders seeking to evade tariffs are known as smugglers.[edit]Types
There are various types of tariffs:- An ad valorem tariffs is a set percentage of the value of the good that is being imported. Sometimes these are problematic, as when the international price of a good falls, so does the tariff, and domestic industries become more vulnerable to competition. Conversely, when the price of a good rises on the international market so does the tariff, but a country is often less interested in protection when the price is high.
They also face the problem of inappropriate transfer pricing where a company declares a value for goods being traded which differs from the market price, aimed at reducing overall taxes due.- A SPECIFIC tariff, is a tariff of a specific amount of money that does not vary with the price of the good. These tariffs are vulnerable to changes in the market or inflation unless updated periodically.
- A REVENUE tariff is a set of rates designed primarily to raise money for the government. A tariff on coffee imports imposed by countries where coffee cannot be grown, for example, raises a steady flow of revenue.
- A PROHIBITIVE tariff is one so high that nearly no one imports any of that item.
- A PROTECTIVE tariff is intended to artificially inflate prices of imports and protect domestic industries from foreign competition (see also effective rate of protection,) especially from competitors whose host nations allow them to operate under conditions that are illegal in the protected nation, or who subsidize their exports.
- An environmental tariff, similar to a 'protective' tariff, is also known as a 'green' tariff or 'eco-tariff', and is placed on products being imported from, and also being sent to countries with substandard environmental pollution controls.
- A RETALIATORY tariff is one placed against a country who already charges tariffs against the country charging the retaliatory tariff (e.g. If the United States were to charge tariffs on Chinese goods, China would probably charge a tariff on American goods, also). These are usually used in an attempt to get other tariffs rescinded.
Currently tariffs are set by a Tariff Commission based on information obtained from the government or local authority and suo motu studies of industry structure.Tax, tariff and trade rules in modern times are usually set together because of their common impact on industrial policy, investment policy, and agricultural policy. A trade bloc is a group of allied countries agreeing to minimize or eliminate tariffs and other barriers against trade with each other, and possibly to impose protective tariffs on imports from outside the bloc. A customs union has a common external tariff, and, according to an agreed formula, the participating countries share the revenues from tariffs on goods entering the customs union.If a country's major industries lose to foreign competition, the loss of jobs and tax revenue can severely impair parts of that country's economy and increase poverty. If a nation's standard of living or industrial regulations are too great, it is impossible for domestic industries to survive unprotected trade with inferior nations without compromising them; this compromise consists of a global race to the bottom. Protective tariffs have historically been used as a measure against this possibility. However, protective tariffs have disadvantages as well. The most notable is that they prevent the price of the good subject to the tariff from undercutting local competition, disadvantaging consumers of that good or manufacturers who use that good to produce something else: for example a tariff on food can increase poverty, while a tariff on steel can make automobile manufacture less competitive. They can also backfire if countries whose trade is disadvantaged by the tariff impose tariffs of their own, resulting in a trade war and, according to free trade theorists, disadvantaging both sides.(Murad)
Douane
Douane commonly refers to one of two agencies:
- the French customs and excise agency, the Directorate-general of customs and indirect taxes (French: La Direction générale des douanes et droits indirects (DGDDI))
- the Dutch Tax and Customs Administration (Dutch: Belastingdienst)
Douanes were a system of taxation through custom duties in France in King Louis XIV's reign. In the singular, it is also the French and Dutch word for customs in the sense of a border check.
The term is derived from the Mughal title dewan (also diwan or divan), held by the chief revenue officer of a province, via the chiefly Bengali term diwani, denoting the right to collect an excise tax on imported goods.
Duty (economics)
In economics, a duty is a kind of tax, often associated with customs, a payment due to the revenue of a state, levied by force of law. It is a tax on certain items purchased abroad.[1] Properly, a duty differs from a tax in being levied on specific commodities, financial transactions, estates, etc., and not on individuals; thus it is right to talk of import duties, excise duties, death or succession duties, etc., but not of income tax as being levied on a person in proportion to his income.
Customs duty
Customs duty is a kind of indirect tax which is realized on goods of international trade. In economic sense, it is also a kind of consumption tax. Duties levied by the government in relation to imported items is referred to as import duty. In the same vein, duties realized on export consignments is called export duty. Tariffwhich is actually a list of commodities along with the leviable rate (amount) of Customs duty is popularly understood as Customs duty.
[edit]Calculation of Customs duty
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 determines 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.
[edit]H. S. Code
For the purpose of assessment of Customs duty, products are given an identification code that has come to be known as the Harmonized System code. This code has been evolved and assigned by the World Customs Organization based in Brussels. H. S. Code may be from four to ten digits. For example 17.03 is the H. S. Code for molasses from the extraction or refining of sugar. However, within 17.03, the number 17.03.90 stands for "Molasses (Excluding Cane Molasses)".
Introduction of H. S. Code in 1990s has largely replaced what used to be known as SITC or Standard International Trade Classification, though SITC remains in use for statistical purposes. In drawing up the national tariff, the revenue departments often specifies the rate of Customs duty with reference to the H. S. Code of the product. In some countries and customs unions, 6-digit HS codes are locally extended to 8 digits or 10 digits for further tariff discrimination: for example the European Union uses its 8-digit CN (Combined Nomenclature) and 10-digit TARIC codes.
[edit]Customs department
Main article: Customs
The national authority that is entrusted the task of realizing taxes on international trade is often referred to as Customs department. Normally the Customs department operates under a national law and is authorized to examine the cargo in order to ascertain actual description, specification volume or quantity, so that the assessable value and the rate of duty may be correctly determined and applied.
[edit]Evasion of Customs duty
Main articles: Tax avoidance and Tax evasion
Evasion of Customs Duties takes place mainly in two ways. In one, the trader under-declares the value so that that the assessable value is lower than actual. In a similar vein, a trader can evade Customs duty by understatement of quantity or volume of the product of trade. Evasion of Customs duty may take place without or in collaboration of Customs officials. Evasion of customs duty does not necessarily constitute smuggling.
[edit]Duty-free goods
Duty-free is the term that is often used to describe goods bought at ports and airports that do not attract the usual government taxes and customs duties. Some countries impose allowances in order to restrict the number of Duty-free items that one person can import into the country. These restrictions often apply to tobacco, wine, spirits, eau de toilette, gifts and souvenirs. Often foreign diplomatsand UN officials are entitled to Duty-free goods. Duty-free goods are imported and stocked in what is called Bonded warehouse.
[edit]
Duty-free shop
Duty-free shops (or stores) are retail outlets that do not apply local or national taxes and duties. Duty-free shopping is a bit of misnomer though because shoppers may still have to pay duties in their home country on items purchased from a duty-free shop. They are often found in the international zone of international airports, sea ports or on board passenger ships. They are not as commonly available for road or train travelers, although several border crossings between the United States and Canada have duty-free shops for car travelers.These outlets were abolished for travel within the European Union in 1999, but are retained for travelers whose final destination is outside the EU. They also sell to intra-EU travelers but with appropriate taxes. Some special member state territories such as Åland, Livigno and the Canary Islands, are within the EU but outside the EU tax union, and thus still continue duty-free sales for all travelers.
European Customs Information Portal (ECIP)
The European Customs Information Portal (ECIP) [1] is a service for business operators, in particular SMEs, in all Member States importing goods into and exporting goods from the EU, such as carriers, forwarders, importers and exporters. It was launched by the European Commission and provides information on the rules to follow for EU imports, exports and transit. The first stage of ECIP focuses on the Safety and Security Amendment to the Community Customs Code [2] which entered into force on 1 July 2009.The customs portal constitutes a single point of access to relevant and practical information on transporting goods into and out of the EU and includes animated scenarios to explain each step of the import, export and transit procedures. It also outlines the legal framework for such procedures and covers information (such as policy information, databases and assistance services) taken from Commission and Member States’ customs websites. In addition, business operators can find useful links to online business databases like the online customs tariff TARIC [3] and the VAT Information Exchange System (VIES) [4], eLearning courses [5], as well as Member State helpdesk services [6].ECIP was developed together with Member States and representatives from trade associations and will be further extended in the future to cover other areas and provide more in-depth information on customs procedures.
European Union Customs Union
The European Union Customs Union is a customs union which consists of all the Member States of the European Union (EU) and a number of surrounding countries.The customs union is a principal task of the European Economic Community, established in 1958. No customs are levied on goods travelling within the customs union and—unlike a free trade area—members of the customs union impose a common external tariff on all goods entering the union. One of the consequences of the customs union is that the European Union has to negotiate as a single entity in international trade deals such as the World Trade Organisation.
Immigration tariff
An immigration tariff is a charge levied on immigrants wanting permanent residency within a nation. As a means of applying price theory to a nation's immigration policy, it is generally advocated as an alternative to existing bureaucratic procedures as a means of moderating or better regulating the flow of immigration to a given level.The idea is frequently associated with American economist Gary Becker, who stated, "When I mention this to people, they sometimes go hysterical.
Import Surtaxes
Import Surtaxes (Import Surcharge), also known as special tariffs, which is an extra tax after the normal import tax of imported goods levied by importing countries,.But the extra tax is for some purposes. Import Surtaxes is different from import duty,which is not reflected in the customs tariff, and is set for a specific purpose. It often depends on their level of taxation which is the specific purpose for collection. It is usually temporary or one-off.[edit]The purpose of setting import Surtaxes
1.To meet the balance of payments crisis, to maintain balance between imports and exports. The United States happens the first trade deficit in 1970’s. Nixon administration in order to meet the balance of payments crisis, they implement the “new economic policy” and announced the levy of foreign imports 10% of all import surcharges;2.Prevent dumping of foreign goods.3.Discrimination against a particular country or retaliation. Thus import surcharges, also known as special tariffs.[edit]
Morrill Tariff
The Morrill Tariff of 1861 was an American protective tariff law adopted on March 2, 1861 during the Buchanan Administration and signed into law by President James Buchanan, a Democrat. The act is named after its sponsor, Representative Justin Morrill of Vermont, who drafted it with the advice of Pennsylvania economist Henry C. Carey. Passage was possible because many low-tariff Southerners had left Congress after their states declared their secession. The Morrill Tariff raised rates to protect and encourage industry and the high wages of industrial workers. It replaced the lowTariff of 1857, which was written to benefit the South. Two additional tariffs sponsored by Morrill, each one higher, were passed during Abraham Lincoln's administration to raise urgently needed revenue during the Civil War.The high rates of the Morrill tariff inaugurated a period of continuous trade protection in the United States that lasted until the Underwood Tariff of 1913. The schedule of the Morrill Tariff and its two successor bills were retained long after the end of the Civil War.
Specific rate duty
A specific rate duty is a tariff levied on imports, defined in terms of a specific amount per unit, such as cents per kilogram. By contrast, an ad valorem duty is a charge levied on imports defined in terms of a fixed percentage of value.
Tariff
A tarrif is a tax levied on imports or exports. The word is derived from the Arabic word taārif, meaning 'fees to be paid.'
History
Tariffs are usually associated with protectionism, a government's policy of controlling trade between nations to support the interests of its own citizens. For economic reasons, tariffs are usually imposed on imported goods.In the past, tariffs formed a much larger part of government revenue than they do today.When shipments of goods arrive at a border crossing or port, customs officers inspect the contents and charge a tax according to the tariff formula. Since the goods cannot continue on their way until the duty is paid, it is the easiest duty to collect, and the cost of collection is small. Traders seeking to evade tariffs are known as smugglers.[edit]Types
There are various types of tariffs:- An ad valorem tariffs is a set percentage of the value of the good that is being imported. Sometimes these are problematic, as when the international price of a good falls, so does the tariff, and domestic industries become more vulnerable to competition. Conversely, when the price of a good rises on the international market so does the tariff, but a country is often less interested in protection when the price is high.
They also face the problem of inappropriate transfer pricing where a company declares a value for goods being traded which differs from the market price, aimed at reducing overall taxes due.- A SPECIFIC tariff, is a tariff of a specific amount of money that does not vary with the price of the good. These tariffs are vulnerable to changes in the market or inflation unless updated periodically.
- A REVENUE tariff is a set of rates designed primarily to raise money for the government. A tariff on coffee imports imposed by countries where coffee cannot be grown, for example, raises a steady flow of revenue.
- A PROHIBITIVE tariff is one so high that nearly no one imports any of that item.
- A PROTECTIVE tariff is intended to artificially inflate prices of imports and protect domestic industries from foreign competition (see also effective rate of protection,) especially from competitors whose host nations allow them to operate under conditions that are illegal in the protected nation, or who subsidize their exports.
- An environmental tariff, similar to a 'protective' tariff, is also known as a 'green' tariff or 'eco-tariff', and is placed on products being imported from, and also being sent to countries with substandard environmental pollution controls.
- A RETALIATORY tariff is one placed against a country who already charges tariffs against the country charging the retaliatory tariff (e.g. If the United States were to charge tariffs on Chinese goods, China would probably charge a tariff on American goods, also). These are usually used in an attempt to get other tariffs rescinded.
Currently tariffs are set by a Tariff Commission based on information obtained from the government or local authority and suo motu studies of industry structure.Tax, tariff and trade rules in modern times are usually set together because of their common impact on industrial policy, investment policy, and agricultural policy. A trade bloc is a group of allied countries agreeing to minimize or eliminate tariffs and other barriers against trade with each other, and possibly to impose protective tariffs on imports from outside the bloc. A customs union has a common external tariff, and, according to an agreed formula, the participating countries share the revenues from tariffs on goods entering the customs union.If a country's major industries lose to foreign competition, the loss of jobs and tax revenue can severely impair parts of that country's economy and increase poverty. If a nation's standard of living or industrial regulations are too great, it is impossible for domestic industries to survive unprotected trade with inferior nations without compromising them; this compromise consists of a global race to the bottom. Protective tariffs have historically been used as a measure against this possibility. However, protective tariffs have disadvantages as well. The most notable is that they prevent the price of the good subject to the tariff from undercutting local competition, disadvantaging consumers of that good or manufacturers who use that good to produce something else: for example a tariff on food can increase poverty, while a tariff on steel can make automobile manufacture less competitive. They can also backfire if countries whose trade is disadvantaged by the tariff impose tariffs of their own, resulting in a trade war and, according to free trade theorists, disadvantaging both sides.(Murad)
Duty-free shop
Duty-free shops (or stores) are retail outlets that do not apply local or national taxes and duties. Duty-free shopping is a bit of misnomer though because shoppers may still have to pay duties in their home country on items purchased from a duty-free shop. They are often found in the international zone of international airports, sea ports or on board passenger ships. They are not as commonly available for road or train travelers, although several border crossings between the United States and Canada have duty-free shops for car travelers.
These outlets were abolished for travel within the European Union in 1999, but are retained for travelers whose final destination is outside the EU. They also sell to intra-EU travelers but with appropriate taxes. Some special member state territories such as Åland, Livigno and the Canary Islands, are within the EU but outside the EU tax union, and thus still continue duty-free sales for all travelers.
European Customs Information Portal (ECIP)
The European Customs Information Portal (ECIP) [1] is a service for business operators, in particular SMEs, in all Member States importing goods into and exporting goods from the EU, such as carriers, forwarders, importers and exporters. It was launched by the European Commission and provides information on the rules to follow for EU imports, exports and transit. The first stage of ECIP focuses on the Safety and Security Amendment to the Community Customs Code [2] which entered into force on 1 July 2009.
The customs portal constitutes a single point of access to relevant and practical information on transporting goods into and out of the EU and includes animated scenarios to explain each step of the import, export and transit procedures. It also outlines the legal framework for such procedures and covers information (such as policy information, databases and assistance services) taken from Commission and Member States’ customs websites. In addition, business operators can find useful links to online business databases like the online customs tariff TARIC [3] and the VAT Information Exchange System (VIES) [4], eLearning courses [5], as well as Member State helpdesk services [6].
ECIP was developed together with Member States and representatives from trade associations and will be further extended in the future to cover other areas and provide more in-depth information on customs procedures.
European Union Customs Union
The European Union Customs Union is a customs union which consists of all the Member States of the European Union (EU) and a number of surrounding countries.
The customs union is a principal task of the European Economic Community, established in 1958. No customs are levied on goods travelling within the customs union and—unlike a free trade area—members of the customs union impose a common external tariff on all goods entering the union. One of the consequences of the customs union is that the European Union has to negotiate as a single entity in international trade deals such as the World Trade Organisation.
Immigration tariff
An immigration tariff is a charge levied on immigrants wanting permanent residency within a nation. As a means of applying price theory to a nation's immigration policy, it is generally advocated as an alternative to existing bureaucratic procedures as a means of moderating or better regulating the flow of immigration to a given level.
The idea is frequently associated with American economist Gary Becker, who stated, "When I mention this to people, they sometimes go hysterical.
Import Surtaxes
Import Surtaxes (Import Surcharge), also known as special tariffs, which is an extra tax after the normal import tax of imported goods levied by importing countries,.But the extra tax is for some purposes. Import Surtaxes is different from import duty,which is not reflected in the customs tariff, and is set for a specific purpose. It often depends on their level of taxation which is the specific purpose for collection. It is usually temporary or one-off.
[edit]The purpose of setting import Surtaxes
1.To meet the balance of payments crisis, to maintain balance between imports and exports. The United States happens the first trade deficit in 1970’s. Nixon administration in order to meet the balance of payments crisis, they implement the “new economic policy” and announced the levy of foreign imports 10% of all import surcharges;
2.Prevent dumping of foreign goods.
3.Discrimination against a particular country or retaliation. Thus import surcharges, also known as special tariffs.
[edit]
Morrill Tariff
The Morrill Tariff of 1861 was an American protective tariff law adopted on March 2, 1861 during the Buchanan Administration and signed into law by President James Buchanan, a Democrat. The act is named after its sponsor, Representative Justin Morrill of Vermont, who drafted it with the advice of Pennsylvania economist Henry C. Carey. Passage was possible because many low-tariff Southerners had left Congress after their states declared their secession. The Morrill Tariff raised rates to protect and encourage industry and the high wages of industrial workers. It replaced the lowTariff of 1857, which was written to benefit the South. Two additional tariffs sponsored by Morrill, each one higher, were passed during Abraham Lincoln's administration to raise urgently needed revenue during the Civil War.The high rates of the Morrill tariff inaugurated a period of continuous trade protection in the United States that lasted until the Underwood Tariff of 1913. The schedule of the Morrill Tariff and its two successor bills were retained long after the end of the Civil War.
Specific rate duty
A specific rate duty is a tariff levied on imports, defined in terms of a specific amount per unit, such as cents per kilogram. By contrast, an ad valorem duty is a charge levied on imports defined in terms of a fixed percentage of value.
Tariff
A tarrif is a tax levied on imports or exports. The word is derived from the Arabic word taārif, meaning 'fees to be paid.'
History
Tariffs are usually associated with protectionism, a government's policy of controlling trade between nations to support the interests of its own citizens. For economic reasons, tariffs are usually imposed on imported goods.In the past, tariffs formed a much larger part of government revenue than they do today.When shipments of goods arrive at a border crossing or port, customs officers inspect the contents and charge a tax according to the tariff formula. Since the goods cannot continue on their way until the duty is paid, it is the easiest duty to collect, and the cost of collection is small. Traders seeking to evade tariffs are known as smugglers.[edit]Types
There are various types of tariffs:- An ad valorem tariffs is a set percentage of the value of the good that is being imported. Sometimes these are problematic, as when the international price of a good falls, so does the tariff, and domestic industries become more vulnerable to competition. Conversely, when the price of a good rises on the international market so does the tariff, but a country is often less interested in protection when the price is high.
They also face the problem of inappropriate transfer pricing where a company declares a value for goods being traded which differs from the market price, aimed at reducing overall taxes due.- A SPECIFIC tariff, is a tariff of a specific amount of money that does not vary with the price of the good. These tariffs are vulnerable to changes in the market or inflation unless updated periodically.
- A REVENUE tariff is a set of rates designed primarily to raise money for the government. A tariff on coffee imports imposed by countries where coffee cannot be grown, for example, raises a steady flow of revenue.
- A PROHIBITIVE tariff is one so high that nearly no one imports any of that item.
- A PROTECTIVE tariff is intended to artificially inflate prices of imports and protect domestic industries from foreign competition (see also effective rate of protection,) especially from competitors whose host nations allow them to operate under conditions that are illegal in the protected nation, or who subsidize their exports.
- An environmental tariff, similar to a 'protective' tariff, is also known as a 'green' tariff or 'eco-tariff', and is placed on products being imported from, and also being sent to countries with substandard environmental pollution controls.
- A RETALIATORY tariff is one placed against a country who already charges tariffs against the country charging the retaliatory tariff (e.g. If the United States were to charge tariffs on Chinese goods, China would probably charge a tariff on American goods, also). These are usually used in an attempt to get other tariffs rescinded.
Currently tariffs are set by a Tariff Commission based on information obtained from the government or local authority and suo motu studies of industry structure.Tax, tariff and trade rules in modern times are usually set together because of their common impact on industrial policy, investment policy, and agricultural policy. A trade bloc is a group of allied countries agreeing to minimize or eliminate tariffs and other barriers against trade with each other, and possibly to impose protective tariffs on imports from outside the bloc. A customs union has a common external tariff, and, according to an agreed formula, the participating countries share the revenues from tariffs on goods entering the customs union.If a country's major industries lose to foreign competition, the loss of jobs and tax revenue can severely impair parts of that country's economy and increase poverty. If a nation's standard of living or industrial regulations are too great, it is impossible for domestic industries to survive unprotected trade with inferior nations without compromising them; this compromise consists of a global race to the bottom. Protective tariffs have historically been used as a measure against this possibility. However, protective tariffs have disadvantages as well. The most notable is that they prevent the price of the good subject to the tariff from undercutting local competition, disadvantaging consumers of that good or manufacturers who use that good to produce something else: for example a tariff on food can increase poverty, while a tariff on steel can make automobile manufacture less competitive. They can also backfire if countries whose trade is disadvantaged by the tariff impose tariffs of their own, resulting in a trade war and, according to free trade theorists, disadvantaging both sides.(Murad)
Morrill Tariff
The Morrill Tariff of 1861 was an American protective tariff law adopted on March 2, 1861 during the Buchanan Administration and signed into law by President James Buchanan, a Democrat. The act is named after its sponsor, Representative Justin Morrill of Vermont, who drafted it with the advice of Pennsylvania economist Henry C. Carey. Passage was possible because many low-tariff Southerners had left Congress after their states declared their secession. The Morrill Tariff raised rates to protect and encourage industry and the high wages of industrial workers. It replaced the lowTariff of 1857, which was written to benefit the South. Two additional tariffs sponsored by Morrill, each one higher, were passed during Abraham Lincoln's administration to raise urgently needed revenue during the Civil War.
The high rates of the Morrill tariff inaugurated a period of continuous trade protection in the United States that lasted until the Underwood Tariff of 1913. The schedule of the Morrill Tariff and its two successor bills were retained long after the end of the Civil War.
Specific rate duty
A specific rate duty is a tariff levied on imports, defined in terms of a specific amount per unit, such as cents per kilogram. By contrast, an ad valorem duty is a charge levied on imports defined in terms of a fixed percentage of value.
Tariff
A tarrif is a tax levied on imports or exports. The word is derived from the Arabic word taārif, meaning 'fees to be paid.'
History
Tariffs are usually associated with protectionism, a government's policy of controlling trade between nations to support the interests of its own citizens. For economic reasons, tariffs are usually imposed on imported goods.
In the past, tariffs formed a much larger part of government revenue than they do today.
When shipments of goods arrive at a border crossing or port, customs officers inspect the contents and charge a tax according to the tariff formula. Since the goods cannot continue on their way until the duty is paid, it is the easiest duty to collect, and the cost of collection is small. Traders seeking to evade tariffs are known as smugglers.
[edit]Types
There are various types of tariffs:
- An ad valorem tariffs is a set percentage of the value of the good that is being imported. Sometimes these are problematic, as when the international price of a good falls, so does the tariff, and domestic industries become more vulnerable to competition. Conversely, when the price of a good rises on the international market so does the tariff, but a country is often less interested in protection when the price is high.
They also face the problem of inappropriate transfer pricing where a company declares a value for goods being traded which differs from the market price, aimed at reducing overall taxes due.
- A SPECIFIC tariff, is a tariff of a specific amount of money that does not vary with the price of the good. These tariffs are vulnerable to changes in the market or inflation unless updated periodically.
- A REVENUE tariff is a set of rates designed primarily to raise money for the government. A tariff on coffee imports imposed by countries where coffee cannot be grown, for example, raises a steady flow of revenue.
- A PROHIBITIVE tariff is one so high that nearly no one imports any of that item.
- A PROTECTIVE tariff is intended to artificially inflate prices of imports and protect domestic industries from foreign competition (see also effective rate of protection,) especially from competitors whose host nations allow them to operate under conditions that are illegal in the protected nation, or who subsidize their exports.
- An environmental tariff, similar to a 'protective' tariff, is also known as a 'green' tariff or 'eco-tariff', and is placed on products being imported from, and also being sent to countries with substandard environmental pollution controls.
- A RETALIATORY tariff is one placed against a country who already charges tariffs against the country charging the retaliatory tariff (e.g. If the United States were to charge tariffs on Chinese goods, China would probably charge a tariff on American goods, also). These are usually used in an attempt to get other tariffs rescinded.
Currently tariffs are set by a Tariff Commission based on information obtained from the government or local authority and suo motu studies of industry structure.
Tax, tariff and trade rules in modern times are usually set together because of their common impact on industrial policy, investment policy, and agricultural policy. A trade bloc is a group of allied countries agreeing to minimize or eliminate tariffs and other barriers against trade with each other, and possibly to impose protective tariffs on imports from outside the bloc. A customs union has a common external tariff, and, according to an agreed formula, the participating countries share the revenues from tariffs on goods entering the customs union.
If a country's major industries lose to foreign competition, the loss of jobs and tax revenue can severely impair parts of that country's economy and increase poverty. If a nation's standard of living or industrial regulations are too great, it is impossible for domestic industries to survive unprotected trade with inferior nations without compromising them; this compromise consists of a global race to the bottom. Protective tariffs have historically been used as a measure against this possibility. However, protective tariffs have disadvantages as well. The most notable is that they prevent the price of the good subject to the tariff from undercutting local competition, disadvantaging consumers of that good or manufacturers who use that good to produce something else: for example a tariff on food can increase poverty, while a tariff on steel can make automobile manufacture less competitive. They can also backfire if countries whose trade is disadvantaged by the tariff impose tariffs of their own, resulting in a trade war and, according to free trade theorists, disadvantaging both sides.(Murad)
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