What is ‘Ad Valorem’ rate of duty?

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justaguide eNotes educator| Certified Educator

An Ad Valorem rate of duty is based solely on the value of goods that are being imported. For example, if a rate of duty on toys is specified as 50% of the value of goods being imported, an importer would have to pay $50 as duty for every $100 worth of toys that are imported irrespective of the number of toys being imported or their total weight.

This is a very common method of implementing duties as only the transaction receipts need to be examined for the amount paid for the goods imported.

In addition to this, duties can also be calculated based on the weight of the goods being imported, the number of items being imported, a onetime transaction tariff or various combinations of these.