- Duty (economics)
Taxation An aspect of fiscal policy
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. 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 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. 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 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.
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.
Evasion of Customs duty
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 without or in collaboration of Customs officials. Evasion of customs duty does not necessarily constitute smuggling.
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.
- ^ Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 450. ISBN 0-13-063085-3.
Wikimedia Foundation. 2010.
Look at other dictionaries:
Duty (disambiguation) — Duty is a philosophical and legal concept. Duty may also refer to: Duty (album), an album by Ayumi Hamasaki Duty (economics), a form of taxation Air Passenger Duty, an excise duty in the United Kingdom Stamp duty, a form of tax on documents… … Wikipedia
Duty-free shop — Duty Free redirects here. For the British sitcom, see Duty Free (TV series). A typical duty free store, at Zürich Airport … Wikipedia
duty differential — ➔ differential1 * * * duty differential UK US noun [C] ECONOMICS, TAX, COMMERCE ► a difference between the rates of tax charged in a country on similar types of goods: »The Government announced a widening of the duty differential in favour of… … Financial and business terms
duty */*/*/ — UK [ˈdjuːtɪ] / US [ˈdutɪ] noun Word forms duty : singular duty plural duties 1) a) [countable/uncountable] a legal or moral obligation He has a duty under the terms of his contract to pay rent. be someone s duty to do something: It is your duty… … English dictionary
countervailing duty — ▪ economics tariff or tax levied to neutralize the unwanted or unintended effects of other duties. When domestic producers are subject to sales taxes (sales tax) or turnover taxes (levied on gross sales), countervailing tariffs are… … Universalium
Binary economics — is a heterodox theory of economics that endorses both private property and a free market but proposes significant reforms to the banking system. The aim of binary economics is to ensure that all individuals receive income from their own… … Wikipedia
Contingent employment (economics) — In economics, contingent employment refers to workers who do not have an implicit or explicit contract for long term employment. Contingent employment generally consists of temporary or part time jobs. See Contingent workforce. Contents 1… … Wikipedia
countervailing duty — ➔ duty * * * countervailing duty UK US noun [C] ► ECONOMICS, TAX a tax on particular imports in order to make the goods less cheap in comparison with similar, more expensive, goods produced in the importing country: »The Commerce Department… … Financial and business terms
discriminating duty — ➔ duty * * * discriminating duty UK US noun [C] ECONOMICS, TAX ► DISCRIMINATING TARIFF(Cf. ↑discriminating tariff) … Financial and business terms
Excise — or Excise tax (sometimes called an excise duty), is a type of tax charged on goods produced within the country (as opposed to customs duties, charged on goods from outside the country).Typical examples of excise duties are taxes on tobacco,… … Wikipedia