Customs / Customs duty

A customs is a tax levied on goods crossing the customs border of a sovereign state or economic integration, which increases the revenues of the budget. It is one of the oldest resource of state revenue.

For decades, customs have meant almost exclusively import duties, although goods can cross the customs border in three ways: entering, exiting or passing through the territory of a country. 

However, only in exceptional cases can it be in the interest of a state to impair the foreign competitiveness of its exported products with export duties. (At the same time, there are, for example, prohibitive duties, and for some monopoly products, so-called fiscal duties.) The states do not impose customs duties on goods in transit passing through their country either, because their traffic-diverting effect would reduce their revenues from freight costs and tolls. 

Customs is one of the most important state tools for achieving economic and trade policy goals. In addition to import restrictions (prohibitory customs), imported products can be differentiated according to place of origin and importance (differentiated duties). 

With a protective tariff, the price of imported goods can be increased, and the market position of domestically produced competitive products can be improved. The protective duty can help strengthen a developing, high-cost manufacturing industry (educational customs). It is also a fact that the domestic production of the unprofitable industry can be sustained with the protective duty (market protection customs). 

Import duties increase the domestic price of the imported goods, as the customs is the cost to be paid by the importer, which must be reimbursed in some form. 

The implementation of the customs policy requires a coordinated system of instruments; it assumes the combined application of customs legislation, customs tariffs and rules of origin. 

A number of distinctions can be enforced on imported goods through the imposition of customs duties. According to the level of import duties, the competitive position of domestic producers improves or worsens, and if the export goods of two different countries are burdened with different levels of duties, foreign competitors will be in a different competitive position in the market of the country that imposes the duty.

The customs organizations of 183 countries representing 98 percent of world trade are members of the World Customs Organization (WCO), whose goal is to secure and facilitate global trade. The World Trade Organization (WTO) is also an important global actor in relation to customs.