Alternative Duty

Alternative Duty is a special method of customs duty assessment in which both ad valorem and specific duty rates are set for the same imported goods, and customs collects the higher of the two amounts. It is often used by countries to protect domestic industries or increase fiscal revenue, applying selective tariffs to certain sensitive goods such as luxury items, tobacco and alcohol, and refined oil. Note: Alternative Duty differs from Compound Duty, which collects both ad valorem and specific duties simultaneously, whereas Alternative Duty collects only one of them. It also differs from Sliding Duty, whose rate adjusts inversely with price changes. Under Alternative Duty, importers must pay attention to the standard actually chosen by customs, usually following the 'whichever is higher' principle, so the tax burden may be higher than under a single assessment method. In practice, one should accurately calculate both the ad valorem and specific duty amounts, anticipate customs' choice, and avoid cost estimation deviations. For example, if a good has a 10% ad valorem rate and a specific duty of 5 yuan per unit, and the ad valorem amount is higher than the specific amount, it is collected ad valorem, and vice versa.