Why Customs Duty is Important

One of the most important roles of a country’s customs agency is the imposition and collection of duties. A duty is a kind of tax that is imposed on certain items that are purchased in another country. Why are duties required? Well, any nation wants its own businesses to grow and develop. The government wants their citizens to buy domestic goods over foreign ones. However, many products are available cheaper coming from another country. To protect domestic business from the entry of lower-priced foreign products, governments impose duties, or tariffs, on these goods. The imposition of duties raises the prices, making them at par or even more expensive than local prices. Aside from encouraging and protecting domestic business, a duty also acts as a means of controlling trade. For instance, to limit the entry of alcohol and cigars, a government imposes a higher duty on those goods. In addition, two nations may agree to lower the amount of duty imposed on each other’s imported goods, resulting in a mutually beneficial trade agreement that enables those countries to trade more freely.

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