The main elements of the tariff regulation mechanism are customs duties, which determine the amount of payment for export and import goods, for which there are customs tariffs. This is a list of bets compiled in a single system. They can be simple and complex, import and export.
Compound Customs Tariffs
This is the establishment of more than two rates for each of the goods, which will depend on the country of its origin. The highest bid is considered autonomous. It is called general, which involves the application to goods of states that have not concluded trade agreements and contracts. Low rate - conventional. It is minimal and is imposed on the goods of countries that trade in the favored nation mode, and low customs tariffs in relation to them are the result of the conclusion of certain trade agreements.
It also provides for the possibility of a situation where additional countervailing or anti-dumping duties are introduced. Such customs tariffs are an exception to the rule, which only emphasizes them, because their level sometimes exceeds even the maximum rates, and significantly. There is also a tariff quota that regulates the amount of goods imported into the country duty-free or at a reduced rate. Customs tariffs are systematic customs duties that apply to the taxation of goods upon import (and sometimes upon export) from a particular country. They are a classic tool for regulating all foreign trade.
Functions
There is a definition that customs duties are taxes that are levied at border crossings and increase the prices of exported or imported goods, thereby influencing both the volume and structure of foreign trade turnover. The main functions of customs tariffs include the following:
- The first is fiscal, relating to both imports and exports, since all customs duties are a revenue item in the state budget.
- The second function is protective (or protectionist). It refers only to imports, and thanks to it, the state protects local producers from foreign competition, which is sometimes very undesirable.
- The third function is balancing, it applies only to export and is established in order to prevent unwanted exports of goods whose prices are lower than world prices domestically for one reason or another. Customs duties are usually classified according to the method of collection, the object of taxation, the nature of the type of rates and the method of calculation.
Collection method
What are the features of the application of customs tariffs by the collection method? They are divided into ad valorem, when the duty is charged as a percentage of the value of the goods (for example, 25% of the customs value); specific, when the duty has a fixed size per unit of goods (for example, $ 15 per 1t); combined, when the types of customs tariffs already listed are combined (for example, 25% of the customs value, but not more than $ 15 per 1t).
If the goods have different qualitative characteristics, but are one product group, the ad valorem duty is most often applied, similar to the proportional sales tax, which applies in all such cases. Specific ones are usually imposed on all standardized goods. The customs tariff of the EAEU Customs Union, which was created to abolish all kinds of duties in trade between the countries of the agreement, is applied in a slightly different way.
Object of taxation: import duties
For the object of taxation, customs duties are divided into import, export and transit. Import duties are tax payments on goods that are imported into the territory of the state. This money goes to the state budget, and the duties themselves regulate the volume of imports, so they are most common around the world. Import duties affect the economy as a tool to stimulate domestic production, as they add to the cost of goods from abroad. By the way, this mechanism also works as an instrument of political sanctions.
The political situation greatly affects the size of import duties. A state can impose the same goods from different countries with duties using different customs tariffs: from the minimum for countries with which relations develop favorably, to the highest possible duties for those countries with which there is tension. Customs tariffs also depend on the category of the product and its market value.
Export and transit duties
When exported goods cross the state’s border, they are sometimes subject to duties when released. This happens extremely rarely, only with the aim of reducing exports and replenishing the budget, as well as in the case of too large differences in domestic prices that are regulated and free in the world market.
Transit duties are imposed on goods transported in transit through the territory of the state. They are also used very, very rarely, most often as an instrument of a trade war. Also, customs tariffs can be variable - seasonal, and applied in order to quickly regulate trade between countries with seasonal products (most often it is agricultural products). Goods that were produced with the use of subsidies are also subject to import duty - compensation when importing.
Product classification
The most important organizational principle by which customs tariffs are built is the classification of goods. This is exactly what the Unified Customs Tariff looks like with the Harmonized system of description and coding of goods, which was developed by STS. Its essence is the classification schemes, which are based on national customs tariffs.
More than a hundred states use the Unified Customs Tariff, which determines the efficiency of their economy. Goods traded in international trade are grouped into six divisions, among which are sections, groups, subgroups, commodity items, subheadings and subheadings. For each product, a special collection fee is determined at border crossings. In our country, customs duties include import and export customs duties; value added taxes levied on the import of goods; excise tax and customs duties.
Special duty
Such collection is carried out as a protective or retaliatory measure in certain cases.
1. If the goods are imported into the country with unacceptable conditions and in such quantities that will harm the domestic manufacturer.
2. To terminate the activities of foreign economic partners violating the interests of the state by unfair competition.
3. As a response to unfriendly or discriminatory actions of foreign states and their actions in unions against Russia.
The size of the customs tariff for this duty is not specially prescribed, since it is set separately in each case. In addition, the amount of such fees is related to the amount of damage identified by the investigation.
Import duties
The rates of all import duties are determined by the Government of the Russian Federation within the limits provided for by the Law "On Customs Tariff". There is a set of rates that apply to goods moving across the Russian border. They are systematized within the framework of the Commodity Nomenclature of Russian Foreign Economic Activity (TN FEA), which is developed on the basis of the HS (Harmonized System of Coding and Description of Goods).
The latter was recommended by the International Chamber of Commerce in 1991 and the EU CP (Combined Tariff and Statistical Nomenclature of the EU). The rates of export duties, as well as the list of goods to which they apply, are established by the government of the Russian Federation. In the framework of Russia's foreign economic activity, not only the duty on the import, export and international transit of goods is applied, but also many types of tariff benefits.
In Russia now
The World Customs Organization (WCO) once every five years approves the next edition of the HS nomenclature. On January 1, 2017, the sixth edition of the HS was introduced, based on the fifth, which entered into force in 2012. However, there are differences in these editions. Formally, the WTO advocates that the most favored nation treatment be observed, which does not provide for an increase in customs tariffs. However, in fact, almost the opposite happens. This explains many changes.
In October 2016, by a decision of the EEC Council, it was established that, simultaneously with the new edition of the HS nomenclature, the new version of the EAEU FEED would also be applied, as well as the Unified Customs Tariff (ETT EAEU). In the list of individual goods appeared changes in import duty rates. This affected both industrial and agricultural products.