MEANING AND USE OF THE LEGAL TERM: AD VALOREM

Ad valorem is a Latin term meaning “according to value.” In legal contexts, especially in taxation and customs, ad valorem refers to a type of tax or duty calculated as a percentage of the assessed value of a product or property. This tax is based on the item’s value rather than a fixed amount.

For instance, an ad valorem tax on imports might be levied at a certain percentage of the value declared on the goods being brought into a country. Similarly, property taxes in some jurisdictions can be ad valorem, where the tax rate is a percentage of the property’s assessed value.

This method of taxation can vary significantly based on the item or property being assessed and the specific percentage set by the governing authority. The use of ad valorem taxation allows for a more flexible system where the tax burden corresponds to the value of the item or property, potentially resulting in higher taxes for higher-value items and vice versa.