Compound Duty

Compound Duty refers to a tariff calculation method where both ad valorem duty and specific duty are levied simultaneously on the same imported goods. Ad valorem duty is levied as a percentage of the value of the goods, while specific duty is levied as a fixed amount per unit of quantity, weight, volume, or other measurement units. Compound duty is typically applied to goods with significant price fluctuations or those requiring control over both value and quantity, such as certain agricultural products, luxury goods, and tobacco. Usage scenarios include: when an importing country aims to protect domestic industries by preventing low-price dumping while also limiting import quantities; or to increase fiscal revenue from high-value, high-consumption goods. Precautions: Enterprises must accurately declare the value and quantity of goods, otherwise it may lead to tariff calculation errors or penalties; compound duty may increase the complexity of cost accounting, and the party bearing the tariff should be clearly specified in quotations and contracts. Difference from ad valorem duty and specific duty: Ad valorem duty is based solely on value, specific duty solely on quantity, while compound duty combines both, typically resulting in higher and more stable tax burdens. Difference from alternative duty: Alternative duty is levied at the higher of ad valorem or specific rates, whereas compound duty is the sum of both.