An Ad valorem duty is a customs duty calculated as a percentage of the imported goods’ customs value rather than their weight or quantity. The applicable rate depends on the product’s tariff classification, origin, and relevant trade rules.
The importer is generally responsible for paying the duty, unless another party assumes that obligation under the agreed import arrangements.
Ad valorem duty is calculated using a simple formula:
Ad Valorem Duty = Customs Value × Duty Rate
For example, machinery with a customs value of $20,000 and an applicable duty rate of 5% would incur $1,000 in customs duty.
However, the customs value may differ from the invoice price, depending on the importing country’s valuation rules.
Unlike ad valorem duty, which is based on the value of goods, specific duty is charged at a fixed rate per unit, such as $2 per kilogram.
Some countries also apply compound duties that combine both methods. The calculation therefore depends on the applicable tariff schedule.
Ad valorem duty is an import tax, separate from freight charges. It is typically assessed during customs clearance and may be payable alongside import VAT and other applicable taxes.
Since freight quotations do not automatically include duties, importers should confirm which costs are covered under the agreed shipping terms.
Other expenses, such as brokerage and processing charges, are explained in our customs clearance fee guide.
Is ad valorem duty charged on every import?
No. Some goods qualify for zero-duty treatment, exemptions, or preferential tariff rates, depending on their classification, origin, and destination.
Can freight and insurance affect ad valorem duty?
Yes. Freight and insurance costs may form part of the customs value, depending on the importing country’s valuation rules.
Import duties affect the total landed cost of goods, making it important to consider them alongside transportation expenses. ASLG coordinates international freight from China, including supplier pickup, shipment consolidation, and export logistics arrangements. Explore our supply chain solutions for your shipping requirements.
