Customs Duty

Customs duty is a financial obligation applied when goods enter (import) or leave (export) a country’s customs territory. It has significant economic effects and plays a crucial role in generating public revenue. This duty arises at the moment goods are presented to customs and constitutes a public claim regulated by the Customs Law No. 4458. As a definition, it is included in Article 3/8-a of the said law and covers all taxes applied during import and export. These include various levies such as Value Added Tax (VAT), Special Consumption Tax (SCT), Anti-Dumping Duty, Countervailing Duty, Additional Customs Duty, and Additional Financial Obligations.

Customs duties are not governed by the Tax Procedure Law (VUK) but are instead directly managed by the Customs Law and the regulations and communiqués issued based on this law. This has necessitated that customs duties be handled under a procedure distinct from classical tax regimes. Furthermore, in line with European Union harmonization, customs practices have been aligned with GATT and WTO norms.

Since ancient times, customs duties have been one of the main sources of state revenue, fulfilling both fiscal and protective functions throughout history. In the Ottoman Empire, indirect taxes such as bac and avarız can be considered the historical predecessors of modern customs duties. During the Republican era, customs policies were reorganized to both protect the national industry and ensure state revenue. Following the establishment of the Customs Union with the European Union in 1996, these duties have increasingly taken on the role of trade policy instruments.

From an economic perspective, customs duties increase the price of imported goods, thereby supporting domestic production. However, this may adversely affect consumer welfare. They also have a stimulative effect on production and employment. Moreover, the revenues collected through these duties can be used to finance public services.

Customs duty legally arises once the taxable event occurs. This event consists of the presentation of goods to customs, their declaration, and their placement under a customs procedure. The most common procedure is “release for free circulation,” i.e., importation. At the time of declaration, a customs declaration and necessary documents are submitted. Based on these documents, customs duty is calculated according to tariff classification, customs value, and origin.

The stages of taxation are as follows:

• Declaration: Involves the information presented by the declarant to customs.
• Assessment: Calculation of the duty by the customs administration.
• Notification: Informing the taxpayer of the assessed duty.
• Accrual: Finalization of the duty following notification.
• Collection: Actual payment of the duty.

The customs value of goods forms the tax base for customs duty. According to the WTO Valuation Agreement (application of Article VII of GATT), this value is primarily the transaction price of the imported goods. However, the accuracy of this price is evaluated within the context of related party transactions, partial payment transfers, and similar considerations.

If the transaction price cannot be determined, alternative methods are used:

• Valuation based on the value of identical or similar goods,
• Computed value based on production costs,
• As a last resort, a reasonable determination method by the administration.

The customs value is declared using the Value Declaration Form attached to the declaration and is legally binding on the declarant. The customs administration has the authority to investigate the accuracy of this value.

The person or entity importing the goods is liable for the customs duty. However, in practice, customs brokers who declare and conduct procedures on behalf of this person are also responsible as “representatives.” The authority of representation may be direct or indirect. In indirect representation, the representative acts in their own name but on behalf of another, increasing their liability.

In cases of declaration errors, lack of information, origin fraud, or procedural violations, both the importer and the representative are jointly and severally liable for the duty, penalties, and interest. The customs administration may enforce this liability directly during the collection phase.

Accrual of the duty is finalized when the assessment by the customs administration is notified to the taxpayer. Notification is made in writing, and the declarant is granted a 10-day payment period. If payment is not made, a late fee is applied, and the duty becomes a public receivable, collected according to the provisions of the Law on Collection of Public Receivables.

Additionally, in cases where resolution or finalization is pending at customs, the “guarantee” mechanism is activated. This guarantee may be in the form of cash, bank guarantee letters, or treasury bonds. Through this method, the goods can be released while the administration’s receivable is secured.