Tariffs And Tax – A Different Perspective

Given that the threat of tariffs has now become a reality there's no shortage of commentary on this subject. This note puts to one side the geopolitics of the tariff rates and instead focuses on the interaction of tariffs with other UK taxes such as corporation tax, income tax and VAT.

Tariffs have a long history, and the US is not alone in imposing them. In fact, almost every country imposes tariffs of some sort, however World Trade Organization (WTO) membership and/or bilateral trade agreements impose certain boundaries.

According to the WTO, tariffs are a type of customs duty levied on imported goods. The most common form of tariff is an ad valorem tariff which means the charge is calculated based on a percentage of the value of the imported goods. Fixed tariffs can also be imposed, for example a fixed specified duty can be charged on the quantity of a product imported. Other forms of tariffs might employ a compound rate, a mixed duty or a minimum import price