What Is a Duty?
The term "duty" refers to a form of taxation levied on certain goods, services, or other transactions. People and corporations may be required to pay levies on imports and exports by governments in the form of customs duties and other taxes. This is done in order to collect revenue and to satisfy other economic reasons. Duties are enforceable by law and may be imposed on commodities or financial transactions instead of individuals.
The term also refers to the responsibilities held by an individual, especially someone in a position of power.
- A duty is a form of taxation levied on certain goods, services, or other transactions that are imported and exported.
- Duty rates are a percentage determined by the total value of the goods paid for in another country.
- Duties provide a form of commerce protection for jobs, the economy, the environment, and other interests by controlling the influx and outflow of merchandise.
- A duty may also be someone's moral or fiduciary responsibility.
Understanding a Duty
Governments impose taxes on individuals and companies that make or receive shipments internationally. These levies must be paid before delivery can be made. These levies are called customs or import duties. These are tariffs or taxes imposed on goods transported across international borders.
Customs duty rates are a percentage determined by the total value of the goods paid for in another country. The quality, size, or weight of the product are not determining factors. The Harmonized Tariff System of the United States is used domestically as a reference for applicable tariffs on merchandise imported to the country.
The intent of this form of duty is to provide a form of commerce protection for each country's jobs, economy, environment, and other interests by controlling the influx and outflow of merchandise. Duties may be imposed on restrictive and prohibited goods that are shipped in and out of a country. The imposition and collection of duties also help contribute to a nation's revenue pool.
Duties When Traveling
This form of duty can be revoked in certain situations such as an airport's duty-free shop. When customers patronize a duty-free shop, commodities that are usually taxed such as cigarettes and alcohol will not have a duty levied on them. Foreign visitors will then be able to purchase the goods at a lower price compared to domestic citizens.
There are limits and guidelines for shopping duty-free. The products purchased are intended to be taken out of the country where they were bought. Shoppers generally have to show their passports when making duty-free purchases.
Travelers who make duty-free purchases may be required to declare to customs officials what they bought once they arrive back in their respective home countries. They may be required to show receipts for the purchases. Monetary limits on the value of duty-free purchases may be set. If the value exceeds the threshold, tariffs and local taxes may be imposed on the purchases.
The U.S. Customs and Border Protection will outline the details regarding duties on a variety of products. Specific details are outlined for tobacco and alcoholic products as well as items being brought in from Cuba.
The term "duty" may also refer to any responsibilities—whether moral or otherwise—held by an individual. These are obligations that a person—especially someone in a position of authority—has to fulfill the responsibilities of their position.
In a corporate context, this is a fiduciary responsibility that a company's chief executive officer (CEO) has to the company's shareholders. This means that any course of action the CEO takes should be in the best interests of the company's shareholders. For example, a CEO's duty can include weighing whether or not a merger deal with a rival would provide adequate shareholder value.
This responsibility is also similar to a fiduciary duty. A fiduciary duty is when an individual places their trust and reliance on another in regards to a monetary situation. For example, a financial adviser would have a fiduciary duty to their clients and must act in the best interest of their clients. The same would hold true for an executor of an estate. The fiduciary has a duty to take responsibility and make decisions that will benefit the client above anyone else.