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Spain enjoys low import duty burdens


Consumers in Spain benefit from one of the world’s smallest import duty burdens, thanks to a low tax take from import duties in proportion to the size of its economy, according to a new study by UHY, the international accounting and consultancy network.

UHY studied customs duties levied by 18 economies around the world as a percentage of each economy’s size* as a simple indicator of the impact of a country’s trade barriers.

It found that Spain charges import taxes equating to 0.15% of its GDP, compared to a global average of 0.48%, thanks largely to high levels of trade with other EU member states.

The major EU economies surveyed raised proportionally the least in customs duties, with the burden of customs duties just below Spain’s at 0.13% of their GDP on average.

Countries which are part of the North American Free Trade Agreement (NAFTA): the US, Canada and Mexico, levy, on average, a sum equivalent to 0.2% of their GDP in customs revenues.

UHY adds that the benefits to EU consumers of a low customs duties burden, and its positive effect on the competitiveness of EU businesses, could be enhanced further if the EU makes progress in negotiating more effective trade agreements with non-EU trading partners.

Comments Alvaro Villar, partner at UHY Fay & Co, a member of UHY: “Consumers in Spain are getting a good deal as a result of the low import duty burden on goods from abroad, and businesses of course also benefit from the open competition that comes from being able to export freely across the whole of the EU.”

“Multilateral organisations like the Association of South East Asian Nations and Mercosur in Latin America are becoming increasingly important. It is vital that the EU makes progress in its negotiations on trade agreements if Spain’s exports to these growing markets are not to be left at a significant disadvantage.”

“The EU faces some major challenges ahead with the possibility being raised of Greece or even Britain leaving. It is crucial that any political change that lies ahead does not affect the progress that has already been made on promoting free trade within the EU – or distract from current efforts to improve trade agreements between the EU and other countries.”

UHY notes that while the amount levied in duties is a useful measure of the impact of a country’s trade barriers, other factors can also have a bearing. For example, some countries may also impose additional taxes which disproportionately affect imports.

In China, in addition to higher import duty rates on foreign luxury goods, there is a consumption tax on goods such as alcohol, tobacco, cars and cosmetics; categories in which the most popular brands are often foreign. In Brazil, as well as numerous import duties, some of the taxes affecting imports are calculated based on the value of the goods themselves, plus the other taxes levied. This makes for a very complex system and high costs of import, if not planned well.

Conversely, many other economies are creating more Free Trade Agreements (FTAs) or customs unions with a more diverse range of countries in order to increase competitiveness. Many are benefitting from spreading their net far wider than purely their immediate geographical neighbours.”

For example, Mexico has a network of ten FTAs with 45 countries, as well as 30 investment agreements and nine other limited scope agreements. The US has 14 FTAs with countries including Korea, Singapore and Morocco. Australia has just signed an FTA with China, one of its key trading partners, which should help it to reduce the import duty costs borne by consumers in line with other developed economies.

table of duty burden in world countries

table of duty burden in world countries

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