What is an Ad Valorem Tax?

Ad valorem tax refers to the tax levied according to the price of goods, and its tax rate is expressed as a certain percentage of the price of goods. Ad valorem tax equals the total value of the goods multiplied by the ad valorem tax rate. The ad valorem tax is proportional to the price of the goods. ^[1]

Ad valorem tax

Ad valorem tax refers to the tax levied according to the price of goods, and its tax rate is expressed as a certain percentage of the price of goods. Ad valorem tax equals the total value of the goods multiplied by the ad valorem tax rate. The ad valorem tax is proportional to the price of the goods. ^[1]

Ad valorem tax is "

First, since ad valorem taxes are calculated based on the value of the goods, it is relatively easy to estimate how much fiscal revenue is due.

Second, ad valorem tax

The ad valorem tax collection is relatively simple. For the same kind of goods, it is not necessary to classify them in detail due to their different quality.

Ad valorem tax is levied on the price of imported goods

Ad valorem tax refers to the tax levied at a certain ratio based on the price or amount of the taxable object, and is also called ad valorem. At present, most of the taxes implemented by countries around the world are ad valorem taxes, and the value added tax, business tax, and real estate tax in China's current tax system are also ad valorem taxes.

The ad valorem price used in ad valorem tax in China can be roughly divided into four types:

The first type is the actual transaction price, which can be divided into tax-included price and tax-free price;

The second category is the duty-paid value, which can be divided into CIF, FOB and legal prices;

The third type is the composition price, that is, the taxable price composed of factors that should be included in the tax-included price;

The fourth category is special prices, that is, taxation prices used by tax authorities to ensure taxation and facilitate collection management.