Ad Valorem Duty
Duty & Tax Basics · Duty Calculation
What is Ad Valorem Duty?
Ad valorem duty is customs duty calculated as a percentage of a good's value, rather than a flat amount per unit or per unit of weight. It's Latin for 'according to value,' and it's by far the most common way customs duty is charged worldwide.
Because it scales with value, ad valorem duty means a more expensive item pays proportionally more duty than a cheaper one in the same category - unlike a specific (per-unit) duty, which charges the same flat amount regardless of the item’s price.
Ad valorem duty just means 'duty as a percentage' - like a 10% duty rate meaning you pay 10% of the item's customs value, the same way a percentage-based sales tax scales with the price of what you're buying.
When to Use It
Most product categories in most countries use ad valorem duty, so this is the calculation to use whenever a duty rate is expressed as a percentage rather than a flat per-unit or per-kilogram figure.
Examples for Ad Valorem Duty
| Customs value | Duty rate | Duty owed |
|---|---|---|
| $100 | 5% | $5.00 |
| $500 | 12.5% | $62.50 |
| $1,200 | 20% | $240.00 |
Frequently Asked Questions About Ad Valorem Duty
Is ad valorem duty the most common type of customs duty?
Yes - the large majority of tariff lines worldwide are ad valorem (percentage-based) rather than specific (flat per-unit) duty, though some categories, especially agricultural goods in certain markets, still use flat or weight-based rates.
What’s the opposite of ad valorem duty?
Specific duty - a flat amount charged per unit, per kilogram, or similar, regardless of the item’s value. Switzerland’s weight-based duty on some agricultural imports is an example.
Does a higher-value item always pay more ad valorem duty?
Within the same duty rate and category, yes - since the duty is a percentage of value, a $1,000 item pays ten times the duty of an otherwise-identical $100 item at the same rate.
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