General

What are the common taxation methods in international trade?

International trade taxation method (1): ad valorem tax

       Tariffs are levied according to the price of the commodity, and the tax rate is generally expressed as a percentage, that is, a certain percentage of the commodity price. However, in determining the dutiable value of goods, customs practices vary from country to country. Some are based on the invoice price, some are based on the FOB price of the commodity, some are based on the CIF price, and some are based on the price of the transaction between independent buyers and sellers under the conditions of free competition, that is, the so-called "normal price", and some are based on the "customs price". Appraised price” to calculate ad valorem tax. The more common is the CIF value as the customs value. The protective effect of ad valorem duties fluctuates with price fluctuations. When prices rise, its protective effect increases; when prices fall, its protective effect decreases. Many countries in the world use ad valorem taxes.

International trade taxation method (2): specific tax

       Tariffs are levied according to the weight, quantity, length, area, volume, capacity and specifications of the goods. Tariffs based on the weight of the item are the most common. When prices rise, the specific tax amount cannot be increased accordingly, and its protective effect is small; when prices fall, the tax amount is not affected, and its protective effect is large. Switzerland is the only developed country to adopt specific taxes exclusively.

International trade taxation method (3): mixed tax

       Also known as compound tax, that is, both ad valorem and specific tax methods are used at the same time. Some are based on ad valorem, and specific tax is levied; some are based on specific tax, and ad valorem tax is levied. The United States uses more mixed taxes.

International trade taxation method (4): choice tax

       A commodity is subject to both an ad valorem tax rate and a specific tax rate, whichever is higher is taxed. Sometimes, in order to encourage the import of a certain commodity, there is also a tax on the lower one.