ad valorem

A calculation of a sum by reference to a value. Thus the value of a calculation is made in proportion to or in relation to a value. An ad valorem tax is determined by the value of the item taxed, such that the value of the tax changes with variations to the value of the item which is subject to the particular tax.

Ad valorem taxes are typically used in the calculation of stamp duty.

[Latin: To value]

Usage: The graduations of the ad valorem duty were effective from the beginning of the new year.

Related Words: pro rata; per capita; per annum; per diem.