What is 'customs duty'?

Customs duty is a tax specifically imposed on imported goods entering a country. It is designed to generate revenue for the government and to regulate the flow of goods, often aimed at protecting domestic industries from foreign competition by making imported goods more expensive.

When goods are brought into a country, customs authorities assess them and determine the appropriate duty based on factors such as the type of goods and their value. This process helps ensure that the country collects taxes on products entering its market, which can also influence trade policies and balances.

The other options do not accurately describe customs duty. A tax on the profit made from selling goods refers to income tax, a fee for exporting goods is often related to tariffs or handling charges rather than customs duty, and a tax on international services is associated with value-added tax or different type of service tax. None of these alternatives reflects the specific nature of customs duty as it pertains solely to imported goods.