What Are Specific-Rate Tariffs in the Calculation of Export Duties?

Pursuant to the Customs Law, import duty on imported goods may be imposed on the basis of an ad valorem (percentage) tariff or specific-rate tariff or a combination of the two. As such, what are specific-rate tariffs?

Definition

A specific-rate tariff is a tariff imposed based on the unit of goods. A specific-rate tariff specifies the amount of import duty rate that must be paid per unit of goods. Import duty based on a specific-rate tariff is calculated by multiplying the number of units of goods by the tariff for the imposed import duty.

The Minister of Finance determines whether an ad valorem tariff or a specific-rate tariff is used for certain goods. Of the many imported commodities, only a small percentage are subject to specific-rate tariffs. These goods include rice, sugar and a number of cinematographic products.

Sugar is subject to a specific-rate tariff on a stratified basis according to goods specifications of the goods. On the other hand, rice and film (cinematographic products) are only subject to one tariff for the overall specification of the goods. For example, the specific-rate tariff for rice in July 2019 was set at IDR450 per kg.

The following is the calculation of import duty using a specific-rate tariff. For example, Importer A imports 5,000 tons of Thai Hom Mali rice from Thailand at a CIF price of THB12,000/ton. The import duty tariff for rice is 450/kg.

With this assumption, the calculation of duty is as follows:

Duty = Number of Units of Goods x Imposed Import Duty

= (5,000 tons x 1,000) x 450/kg

= IDR2.25 billion

To facilitate the determination of the amount of import duty tariffs, imported goods are classified in the systematically prepared list of classifications of goods. This systematic classification of goods is referred to as the Harmonised Commodity Description and Coding System (HS). (rig)