Legal Definitions - customs duty

A customs duty is a type of tax imposed by a government on goods that are transported across international borders. These duties are typically levied on imported goods, meaning items brought into a country, but can occasionally apply to goods being exported. Governments use customs duties for various reasons, including generating revenue, protecting domestic industries from foreign competition, or regulating the flow of specific products.

Here are some examples to illustrate how customs duty applies:

• Example 1: Importing Raw Materials for Manufacturing

  A shoe manufacturer in Mexico orders a large shipment of specialized leather from Argentina to use in its production line. When the leather arrives at the Mexican border, the manufacturer must pay a customs duty to the Mexican government based on the value and quantity of the imported material. This payment is a tax on the foreign goods entering Mexico for commercial use.

• Example 2: Online Purchase from an International Retailer

  An individual in the United Kingdom purchases a limited-edition collectible action figure from an online store based in the United States. When the package arrives in the UK, customs officials assess a customs duty based on the item's declared value and type. The buyer is then required to pay this duty, along with any applicable value-added tax (VAT), before the package can be delivered to their address.

• Example 3: Bringing Goods Back from International Travel

  A family returns to Germany after a holiday in Turkey, having purchased several expensive rugs and pieces of jewelry that exceed the personal duty-free allowance set by German customs regulations. Upon re-entry into Germany, the family declares these items to customs officials and is required to pay a customs duty on the value of the goods that surpass their allowance. This duty is a tax on the foreign-purchased items being brought into Germany for personal use.