Customs duty is a type of tax paid to ensure that your products pass through customs smoothly during import or export. The payment amount varies depending on the tax rates of the countries and the value of the product. In this article, you can find everything you need to know about customs duty in international trade transactions. What is customs duty? How is customs duty calculated? What is customs duty exemption? All your questions are answered in this article.
What is Customs Duty?
Customs duty is a tax imposed on goods that cross a country’s borders or are imported. This tax is usually paid by the importer or exporter. Customs duties are used for purposes such as protecting local production, regulating trade balance, generating tax revenue, and enforcing regulations related to consumer health or safety.
Customs duty is typically determined based on the value, quantity, or weight of the imported goods. The tax rates may vary depending on the type of product, the country of origin, and other factors. By increasing the cost of imports, customs duties can encourage local production. Therefore, customs duties are considered an important component of a country’s trade policy.
Customs duties are also related to international trade regulations and free trade agreements. If there are free trade agreements or customs union agreements between countries, customs duties may be reduced or eliminated under these agreements. This aims to liberalize trade and promote the freer flow of goods and services.
Each country has its own customs duty policies and rates, so it is important to pay attention to and account for these taxes appropriately when engaging in international trade.
In Turkey, the tax application at customs for import and export transactions is regulated by Law No. 4458, which determines the tax rates applied to different product groups.
You can follow the latest customs rules on the Customs Guide page prepared by the Ministry of Trade.
How is customs duty calculated?
When calculating customs duty, the value of the goods declared on the commercial invoice, along with all insurance and transportation costs, is taken as a percentage. This value is then multiplied by the customs duty percentage of the Customs Tariff Code (GTIP). The Customs Tariff Statistical Position Number (GTIP) is a 12-digit code that determines the classification of a product in the Turkish Customs Tariff Schedule. According to the customs tariff, the formula can be expressed as CIF Value (Goods Value + Freight (International Transportation Cost) + Insurance).
Three key factors are considered in the calculation of customs duty:
- Tariff classification of the goods: Tariff classification ensures that exported goods are systematically classified in the same way, allowing all institutions involved in international trade to speak a common language. For more detailed information on the classification of goods, you can visit the tariff classification page prepared by the Ministry of Trade.
- Origin of the goods: The concept of origin refers to which country a good’s economic value belongs to when introduced into the market. For more detailed information on the origin of goods, you can visit the “What is the origin of goods?” page prepared by the Ministry of Trade.
- Customs value of the goods: In customs duties levied on goods to be shipped internationally, the tax base is the customs value of the goods. For more detailed information on the customs value of goods, you can visit the customs value page prepared by the Ministry of Trade.
How to check customs duty?
You can check customs duties through the “Customs Tax and Penalty Debt Inquiry System.” By clicking the link to the Customs Tax and Penalty Debt Inquiry System of the Ministry of Trade, you can learn about your customs duty debt.
How to pay customs duty?
Once the customs duty for your shipment is determined, you will be notified via SMS. After receiving the notification, you can make the payment through public banks or at the cashier desks in the customs accounting office. Additionally, some shipping companies offer the option to pay customs duty through an operator. You can pay your tax via the payment link provided in the SMS sent by the shipping company. The tax you pay will be reflected on your phone bill by your operator.
You can make your Customs Duty payments to certain authorized banks. The public banks where Customs Duty can be paid are as follows:
- T.C. Ziraat Bankası A.Ş.
- Türkiye Halk Bankası A.Ş.
- Türkiye Vakıflar Bankası T.A.O.
- Ziraat Katılım Bankası A.Ş.
- Vakıf Katılım Bankası A.Ş.
- Türkiye Emlak Katılım Bankası A.Ş
What is Customs Duty Exemption?
The exemption from customs duties for certain products imported from abroad or exported abroad is called Customs Duty Exemption. According to Article 167 of Customs Law No. 4458, the products exempt from customs duties are as follows.
1. Goods brought for the personal use and residence of the President,
2. Diplomatic goods imported based on the principle of reciprocity,
3. All kinds of vehicles, equipment, weapons, machinery, devices, and systems to be imported exclusively for the primary duties of the General Staff, the Ministry of National Defense, the force commands, the National Intelligence Organization, the Defense Industry Agency, the Gendarmerie General Command, the Coast Guard Command, and the General Directorate of Security, as well as the activities of the Mechanical and Chemical Industry Corporation and the duties of the Ministry regarding anti-smuggling, including spare parts, fuel, oils, raw materials, and materials to be used in research, development, training, production, modernization, software, construction, maintenance, and repair, and aid materials received free of charge from foreign sources.
4. Personal belongings to be placed into free circulation by individuals:
a) Used motorized or non-motorized private transport vehicles belonging to individuals moving their residence to the Turkish Customs Territory, which are no more than three years old at the time of purchase,
b) Any kind of used household goods belonging to individuals moving their residence to the Turkish Customs Territory,
c) Dowry items belonging to those who are marrying or coming to Turkey to marry a person whose residence is in Turkey,
d) Personal belongings inherited,
e) Educational materials and other household items related to education for students coming to Turkey for the purpose of studying,
f) Used household goods brought back by individuals who temporarily left the Turkish Customs Territory,
g) Household goods temporarily or permanently brought for use in homes purchased or rented in Turkey by individuals whose residence is outside of Turkey,
h) Personal belongings not of a commercial nature, intended for the personal use of passengers.
5. Other items to be placed into free circulation by individuals:
a) Gift items carried by passengers, not exceeding a value of 430 EURO,
b) Medals of honor or awards,
c) Gifts received within the framework of international relations.
6. Items imported by individuals, institutions, and organizations designated by the President, to be used for their intended purpose and not for commercial purposes:
a) Items for educational, scientific, and cultural purposes, as well as scientific instruments and devices,
b) Instruments and devices intended for medical diagnosis, treatment, and research,
c) Animals and biological or chemical substances intended for scientific research purposes,
d) Human-derived therapeutic substances, as well as blood grouping and tissue typing markers,
e) Substances intended for quality control of products with medicinal properties,
f) Items imported for use in research and development activities conducted or supported by national research and development institutions.
7. Imports related to the conduct of commercial activities:
a) Capital goods and other materials imported due to the relocation of a business,
b) Products obtained from the properties of farmers operating in neighboring countries within the Turkish Customs Territory,
c) Seeds, fertilizers, and other products brought by farmers from neighboring countries for the cultivation and processing of soil and crops on their properties in the Turkish Customs Territory,
d) Non-commercial samples:
i. Sample items and models of insignificant value,
ii. Printed advertising documents and materials intended for advertising purposes,
iii. Products used or consumed at a trade fair or similar event,
e) Items imported for the purpose of inspection, analysis, or testing.
8. Items used in transportation:
a) Auxiliary materials for stacking and protecting goods during transport,
b) Dry hay, feed, and foodstuffs, as well as medicines used during the transport of live animals,
c) Fuel and lubricants present in transportation vehicles and special containers,
d) Equipment and operational materials belonging to sea and air transport vehicles,
e) Aircraft, engines, and their components and parts imported for use by airlines engaged in passenger and cargo transportation activities.
9. Import of information materials:
a) Items sent to organizations that protect publication rights or industrial and commercial patent rights,
b) Tourism promotional materials,
c) Various documents and items with no commercial value.
10. Import of funeral-related items:
a) Items intended for the construction, maintenance, and decoration of war victim memorials and cemeteries,
b) Coffins, urns for ashes, and decorative funeral supplies.
11. Other items:
a) Items intended for the use of disabled and handicapped individuals,
b) Goods sent to assist those affected by crises such as natural disasters, dangerous and contagious diseases, major fires, radiation, air pollution, significant chemical and technological incidents, and large population movements,
c) Pharmaceutical products brought for use in international sports competitions held in Turkey.
What are the customs duty rates by country?
The customs duty rate applied to import or export transactions between EU member countries and Turkey is 18%. For transactions between non-EU countries and Turkey, a 20% duty rate is applied.
What is the Additional Customs Duty?
The Additional Customs Duty refers to a tax levied on certain imported goods in addition to the regular customs duty. The purpose of this tax is to protect domestic producers and the local market. The Additional Customs Duty (ACD) is part of a country’s foreign trade policies and is applied as an extra tax or fee on specific imported products. These taxes can be used to protect local industries, increase foreign currency reserves, or achieve other economic goals.
The Additional Customs Duty is paid by the importer and is collected on top of the standard customs duty during the import process. This type of tax can increase the costs for importers and is often used to restrict imports or encourage importers to favor local products.
Each country has its own customs policies and Additional Customs Duty rates, which may vary depending on the type of product, the country, and the period. The customs authority or trade ministry of the relevant country determines the rates and implementation rules for the Additional Customs Duty. Businesses or individuals planning to import should research the applicable additional customs duty rates and requirements in advance.
How are customs procedures carried out in exports?
The first step in customs procedures is making a customs declaration. When exporting from Turkey, you need to inform the customs administration by submitting a customs declaration. This form includes details such as sender and recipient company information, value, tariff, origin, transport details, and taxes. You must submit the customs declaration electronically using the BILGE system (Computerized Customs Activities). To get a username and password, you can apply to any customs office.
During the approval process, the Customs Office may want to inspect your product, which is called a “physical inspection of goods.” Once the customs office reviews and approves your customs declaration for the goods you wish to export, you are ready to proceed with the export.
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