Customs, tax & compliance

Import duty (customs tariff)

A tax charged on imported goods on their customs value, according to the HS code and country of origin. It is usually a percentage of value (ad valorem), sometimes an amount per quantity (e.g. EUR per tonne). The rate can change with the general WTO rate (MFN), free trade agreements (zero or reduced rates), additional duties or anti-dumping measures. In landed-cost calculations it is computed on the CIF value including freight and insurance and is then added to the VAT base.

Related terms

HS code (Harmonized System)

The World Customs Organization’s goods classification system, used in about 200 countries. The first six digits are the same everywhere (e.g. 3902.10 polypropylene); countries add their own subdivisions – 12-digit GTİP in Türkiye, 8-digit CN and 10-digit TARIC in the EU, 10-digit HTS in the USA. The correct code determines the duty rate, import licences, anti-dumping measures, preferential origin rules and trade statistics. Misclassification can lead to back duties and penalties; where unsure, a binding tariff information (BTI) ruling can be requested.

VAT (value added tax) on imports and exports

A tax on consumption. Exports are zero-rated in most countries, so the exporter can reclaim the input VAT it has paid. On imports, VAT is collected at customs on the customs value plus duty and other taxes, and a registered importer can usually deduct it, so the main impact is on cash flow. Between VAT-registered businesses in intra-EU trade the reverse-charge mechanism applies. Standard rates vary widely (e.g. 20 % in Türkiye, 19 % in Germany), and some raw materials enjoy reduced rates.

Anti-dumping and countervailing duty AD

An extra duty a country imposes on imports sold below the exporter’s home-market price (dumping) or supported by state subsidies, where these injure domestic producers. After an investigation, rates are set for specific origin countries and even individual companies; they are very common for raw materials such as steel, aluminium, PET, PVC, chemicals and fibres. Rates can exceed 100 %, so measures in force for the HS code and origin must always be checked when planning imports, and misdeclaring origin through transshipment brings severe penalties.

Customs valuation (transaction value)

The value on which duty is calculated. Under the WTO Customs Valuation Agreement the primary basis is the price actually paid or payable (transaction value). Most countries, including the EU and Türkiye, add freight and insurance up to the point of entry (CIF basis), while some, such as the USA, use a FOB basis. Commissions, royalties and buyer-supplied assists such as moulds may also be added. If under-invoicing between related parties is found, customs applies other methods and penalties.

Explained in the trade handbook

Trade handbook