Transit duties

Transit duty: a charge for moving goods through the territory of a country that is neither the country of departure nor the country of destination. Historically, such duties were an important source of income for states on trade routes.

Where things stand now

Article V of the General Agreement on Tariffs and Trade (GATT) establishes freedom of transit. WTO members must not levy customs duties on goods in transit. Only transport charges and fees commensurate with administrative expenses and the cost of services are allowed.

In the EAEU, goods in transit are placed under the customs transit procedure. Duties and taxes are not paid, but customs may require security for their payment in case the goods do not reach their destination.

In practice, “transit duties” usually means:

• road and port charges along the route;
• fees for escorting and processing the transit;
• security for payment of duties: provided by a bank or given as a pledge;
• in some countries: transit charges under national rules.

Where it comes up in foreign trade

Transit costs end up in the delivery cost. Who pays them, the seller or the buyer, is decided by the Incoterms delivery terms in the contract. For example, under CIF the seller pays for the main carriage to the port of destination.

What to watch for

• Ask the carrier or the freight forwarder which fees apply on the chosen route.
• Check that these costs are included in the freight or in the price of the goods.
• If the carrier is foreign, paying for its services is also an international payment, with a contract and an invoice.

Carriers and forwarders abroad are paid the same way as suppliers of goods: through an agent from our pool. More on the Freight payments page.