Meaning of Tariff

What is Tariff:

Tariff is the tax that must be paid to the State through customs for the goods to be imported or exported.

The tariff is a customs duty converted into law to regulate the entry and exit of goods across the borders of a country. The tariffs applied to imports and exports are different for each product and each State.

See also:

  • Customs
  • Import
  • Export

Tariffs have two purposes:

  • Protective: protects the competitiveness of national assets,
  • Revenue: serves as a source of income for the State.

The word tariff comes from Andalusian Arabic al-inzál which refers to the tax that was charged to the military for lodging in the field.

Types of tariffs

Four basic types of tariffs can be found:

  • Straight ad valorem: is a percentage of the value of the merchandise, for example, 5% of the value.
  • Specific duty: the weight or volume is considered, for example, 5 dollars per kilo.
  • Compound or mixed duty: it is a mixture of the two previous tariffs and sets a minimum or a maximum, for example, 5% for a minimum of $ 5 per kilo.
  • Zero tariff: this applies in cases where there is an agreement to reduce or eliminate tariffs for the movement of goods between two or more countries, such as free trade agreements (FTA).
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