Importing

Is this similar to the sales tax paid inthe USA for goods purchased? If so, then no.

Import duties are collected by the government of the country the goods end up in. They generally can be paid either by the seller or the buyer. They are usually based on the value of the goods and the kind of good. Diamonds get taxed more than widgets, but booze is at yet a different rate.

Usually they end up being booked like freight costs. If you are on the receiving end and paying them, they are part of your cost of goods. If you are on the sending end and paying them more than one treatment is possible depending on the wording of the contract. It might be a sales discount, or it could be a freight cost for a couple of common examples. If the owner wants reports breaking them out for management purposes, set up a separate G/L account for them.

Some countries may impose export duties. These are paid to let stuff out of the country.

Most nasty paperwork I had to attend to was having goods transshipped in the USA from Taiwan to Mexico for additional assembly work. Lots of forms, never mind the extra post 9/11 paperwork. Then there are all kinds of exceptions to all the rules that your customs broker has to know about. [And you thought income tax rules were bad!]

As different goods have different Duty ratings, the duty paid is directly connected to the value of the item imported. For that reason I treat duty as an integral part of CGS and do not strip it out. I may get a shipment of four different spare parts, three of them duty free, one with duty at 6.5 %. To establish a sales price, the duty has to be added to the cost of the part before the mark up is added. Arno