Duty (economics)

From Wikipedia, the free encyclopedia

Taxation
An aspect of fiscal policy
Policies Government revenue Tax revenue · Non-tax revenue Tax law · Tax bracket · Tax threshold Exemption · Credit · Deduction Tax shift · Tax cut · Tax holiday Tax advantage · Tax incentive Tax reform · Tax harmonization Tax competition · Double taxation Representation · Unions Medical savings account Tax, tariff and trade
Economics Price effect · Excess burden Tax incidence Laffer curve · Optimal tax Theory Optimal capital income taxation
Collection Revenue service · Revenue stamp Tax assessment · Taxable income Tax lien · Tax refund · Tax shield Tax residence · Tax preparation Tax investigation · Tax shelter Private tax collection · Tax farming
Noncompliance Tax avoidance · Tax evasion Tax resistance · Tax haven Smuggling · Black market · Transfer mispricing Unreported employment · Tax shelter
Distribution Tax rate Progressive · Regressive Proportional
Types Direct · Indirect · Per unit · Ad valorem · In rem Capital gains · Carbon · Consumption Dividend · Ecotax · Excise · Georgist Gift · Gross receipts · Income Inheritance (estate) · Land value Payroll · Pigovian · Property Sales · Sin · Single · Stamp · Turnover Value-added (VAT) Corporate profit · Excess profits Windfall profits · Negative (income) · Flat
International Financial transaction tax Currency transaction tax Tobin tax · Spahn tax Tax equalization · Tax treaty European Union FTT
Trade Custom · Duty Tariff (Import · Export) · Tariff war Free trade · Free trade zone Trade pact
Religious Church tax · Eight per thousand · Teind · Tithe Fiscus Judaicus · Leibzoll · Temple tax · Tolerance tax Jizya · Kharaj · Khums · Nisab · Zakat
By country List of countries by tax rates Tax revenues as %GDP Albania · Algeria · Argentina · Australia · Azerbaijan · Bangladesh · Bahamas · Bhutan · Canada · China · Colombia · France · Germany · Greece · Iceland · India · Indonesia · Iran · Ireland · Israel · Italy · Japan · Kazakhstan · Lithuania · Taxation in Namibia · Netherlands · New Zealand · Norway · Pakistan · Palestinian territories · Peru · Russia · Singapore · South Africa · Sweden · Switzerland · Tanzania · United Kingdom · United States
v t e

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. The term is often used to describe 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 income tax levied on a person is not considered a duty.

Customs duty

Customs duty is a kind of indirect tax which is levied on the import and export of 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 levied on export consignments is called export duty. Tariff, which is actually a list of commodities along with the leviable rate (amount) of Customs duty, is popularly understood as Customs duty.

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.

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 was developed 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.

Customs department

Main article: Customs

The national authority that responsible for levying taxes on international trade is often referred to as a 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.

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 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 with or without the collaboration of Customs officials. Evasion of customs duty does not necessarily constitute smuggling.^{[citation needed]}

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 diplomats and UN officials are entitled to Duty-free goods. Duty-free goods are imported and stocked in what is called Bonded warehouse.

Duty calculation for companies in real life

With many methods and regulations, businesses at times struggle to manage the duties. In addition to difficulties in calculations, there are challenges in analyzing duties; and to opt for duty free options like Bonded Warehousing.

Companies use ERP software to calculate duties automatically to, on one hand, avoid error-prone manual work on duty regulations and formulas and on the other hand, manage and analyze the historically paid duties. Moreover, ERP software offers an option for customs warehouse, introduced to save duty and VAT payments. In addition, the duty deferment and suspension is also taken into consideration.

Death duty

A tax is levied on the estate of a deceased person in many, but not all, jurisdictions. This tax is sometimes referred to, formally or informally, as death duty.^[2]

References

↑ Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 450. ISBN 0-13-063085-3. Cite uses deprecated parameters (help)
↑ UK National Archive, Looking for records of death duties 1796-1903(example of use of the term death duty)

goods

This article is issued from Wikipedia. The text is available under the Creative Commons Attribution/Share Alike; additional terms may apply for the media files.