Duties, Taxes, Fees and Duty Relief Regimes
Duties, taxes, fees and relief regimes are tested through calculation and eligibility. The exam expects you to build the tax base in the right order and to know when a relief suspends or extinguishes a duty.
Calculation order
Customs duty is charged on customs value at the rate for the classification and origin. Specific and compound duties use quantity or a combination. VAT or GST is usually charged on customs value plus duty plus excise; excise is charged on its own base. Anti-dumping and countervailing duties are additional. Fees for services should be limited to the approximate cost of the service.
Relief regimes
- Temporary admission: full or partial relief for goods imported for a purpose and re-exported unchanged, often under the Istanbul Convention or ATA Carnet.
- Inward processing: relief on imported inputs processed and re-exported, with a compensating-product yield.
- Outward processing: relief on goods exported for processing and re-imported.
- Drawback: refund of duty on imported goods later exported.
- Bonded warehouses and free zones: duty suspended until domestic entry.
- Returned goods, samples, diplomatic and humanitarian relief: conditions in law.
Worked example
Customs value is 50,000; duty 8 percent; VAT 20 percent. Duty is 4,000. The VAT base is 50,000 + 4,000 = 54,000, so VAT is 10,800. Total is 14,800. If excise were 5,000, the VAT base would be 59,000.
Traps
Applying VAT to the FOB value; forgetting duty in the VAT base; assuming relief is automatic; missing re-export deadlines; treating a free zone as outside all customs control.