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.
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).