Customs duty conundrum

[Tofer]

I had a delivery of some items from Singapore recently to our local post office. There I was presented with an unusually large customs duty / VAT charge in relation to the value of goods.

 

Upon querying this charge with the Thai Customs office I was told it was calculated on the total of CIF (carriage, insurance & freight), in accordance with the regulations. The lady kindly forwarded me a link to the customs regulations, which read that duty & VAT are calculated against the FOB (free on board) value, i.e. the cost of the goods only, and not, as she stated, the CIF value.

 

I'm still waiting for a reply to that gem, but thought maybe somebody on this forum could enlighten me as to whether I am mistaken or not with my assumptions of the difference between CIF & FOB.

 

I have never heard of duty being charged on the cost of shipping and insurance before. I have always been under the impression that duty is charged against the actual value of the goods being sent / received.

 

Of course it could just be that the TIT syndrome may be in evidence here!

[Gulfsailor]

Duty is levied on CIF value. Common around the world. I’m not aware of any country that does this differently. 

Edited August 15, 2019 by Gulfsailor

[tifino]

 luckily it's not a big tub of icecream!  - waiting...

[ukrules]

20 minutes ago, Tofer said:

I have never heard of duty being charged on the cost of shipping and insurance before. I have always been under the impression that duty is charged against the actual value of the goods being sent / received.

It's always done this way, they do it this way so they can charge more, hence it will never change.

[Naam]

21 minutes ago, Tofer said:

I have never heard of duty being charged on the cost of shipping and insurance before.

not only TiT but global usance to charge on CIF.

[tgw]

Quote

The lady kindly forwarded me a link to the customs regulations, which read that duty & VAT are calculated against the FOB (free on board) value, i.e. the cost of the goods only, and not, as she stated, the CIF value.

The lady may need to reread the incoterms, but the relevant part here is that FOB includes freight costs when the port is the port of arrival, for example FOB Bangkok.

[damascase]

22 minutes ago, Gulfsailor said:

Duty is levied on CIF value. Common around the world. I’m not aware of any country that does this differently. 

Correct, based on the General Agreement on Tariffs and Trade, and detailed by the World Customs Organization.

https://www.wto.org/english/tratop_e/cusval_e/cusval_info_e.htm

 

[Skunkworks]

So a company in Singapore quoted you FOB Bangkok ?

If so one would expect the goods to be loaded on a ship or truck for further shipment ?

Fob does not include duty - normally fob would be used for in same country _ fob Singapore


Sent from my W-K510-TVM using Thailand Forum - Thaivisa mobile app

[DaRoadrunner]

Correct, duty is based on CIF.

 

I once went ape shit mad with them at the Postal Customs House.

 

The problem is that they may value your goods with a figure they dreamt up out of the blue and so hit you for more than the stated value. If you don't accept, they may impound your goods, charge storage fees and fine you on top of that! It's how they make their money.

 

Welcome to Thailand.

 

[Skunkworks]

Let me add that in all my years of export import never had a quote FOB a post office in a foreign country :-)

It should have been Delivered Duty Paid

If you expect to collect a parcel at the post office - without having to pay import duty

So a company in Singapore quoted you FOB Bangkok ?

If so one would expect the goods to be loaded on a ship or truck for further shipment ?

Fob does not include duty - normally fob would be used for in same country _ fob Singapore


Sent from my W-K510-TVM using Thailand Forum - Thaivisa mobile app

Sent from my W-K510-TVM using Thailand Forum - Thaivisa mobile app

[Tofer]

I'm not questioning the wisdom of the contributors who confirm that duty is paid on the CIF value. I asked and I got the answer, thank you.

 

BUT, playing devils advocate, how would a new / unused item, subject to duty, be charged in amongst a container full of personal effects being shipped into Thailand which are exempt from duty on a settlement basis? Would the entire cost of the shipping and insurance be charged against that one item?

 

It just doesn't appear to make sense to me, but more to the point the regulations I was sent by the lady from customs specifically noted valued against FOB, i.e. the cost of the item only.

 

I have today had a reply from Thai Customs, and the condition is in writing from the lady that the value is against the CIF cost. However she has not deemed to include any link to their regulations clearly stipulating this claim, and is still contradictory to that noted above.

Edited August 16, 2019 by Tofer

[Tofer]

17 hours ago, Skunkworks said:

So a company in Singapore quoted you FOB Bangkok ?

If so one would expect the goods to be loaded on a ship or truck for further shipment ?

Fob does not include duty - normally fob would be used for in same country _ fob Singapore


Sent from my W-K510-TVM using Thailand Forum - Thaivisa mobile app
 

 

17 hours ago, Skunkworks said:

So a company in Singapore quoted you FOB Bangkok ?

If so one would expect the goods to be loaded on a ship or truck for further shipment ?

Fob does not include duty - normally fob would be used for in same country _ fob Singapore


Sent from my W-K510-TVM using Thailand Forum - Thaivisa mobile app
 

Although I'm no expert, I agree with your interpretation of FOB, i.e. it can only be applied at the port of dispatch, Singapore in this case.

[Gulfsailor]

5 hours ago, Tofer said:

I'm not questioning the wisdom of the contributors who confirm that duty is paid on the CIF value. I asked and I got the answer, thank you.

 

BUT, playing devils advocate, how would a new / unused item, subject to duty, be charged in amongst a container full of personal effects being shipped into Thailand which are exempt from duty on a settlement basis? Would the entire cost of the shipping and insurance be charged against that one item?

 

It just doesn't appear to make sense to me, but more to the point the regulations I was sent by the lady from customs specifically noted valued against FOB, i.e. the cost of the item only.

 

I have today had a reply from Thai Customs, and the condition is in writing from the lady that the value is against the CIF cost. However she has not deemed to include any link to their regulations clearly stipulating this claim, and is still contradictory to that noted above.

They calculate shipping cost per duty percentage. Example when you ship by a single private container;

Apples worth 100,000 baht at 10% duty,

bananas worth 100,000 baht at 10% duty,

a car worth 100,000 baht at 80% duty

a sailboat worth 200,000 baht at 0% duty,

At a total shipping and insurance cost of 150,000 baht. 

 

Duty to be paid;

 

10% items; 200,000/500,000 x 150,000 + 200,000 = 260,000 CIF value = 26,000 duty + 7% x 286,000 VAT

 

80% car; 100,000/500,000 x 150,000 + 100,000 = 130,000 CIF value = 104,000 duty + 7% x 204,000 VAT

 

0% items; 200,000/500,000 x 150,000 + 200,000 = 260,000 CIF value = 0 duty + 7% x 260,000 VAT

 

Ps. Customs officers are not stupid. If you creatively make up numbers on the invoice in order pay less duties and VAT, they will assess the fair economic market value in Thailand of the goods and then work backwards from that. 

 

 

 

 

 

 

 

[Sydebolle]

CIF (Cost Insurance Freight) or C&F (Cost & Freight) are the value of the untaxed item upon landing at the destination = hence the freight charges are a part of the product and subsequently taxed.

Only exception there is Switzerland levying import duty on weight rather than cost with variation of weight tariff depending on where the imported product originates. Advantage of that system is that it is much more difficult to cook the weight rather than cook the books! 

[LivinLOS]

On 8/15/2019 at 11:56 AM, DaRoadrunner said:

The problem is that they may value your goods with a figure they dreamt up out of the blue and so hit you for more than the stated value. If you don't accept, they may impound your goods, charge storage fees and fine you on top of that! It's how they make their money.

 

Welcome to Thailand.

Also beware any 'free shipping deals' because the free means free to you, but so they can account for the cost often appears on the shipping invoice.. 

 

 

[TigerandDog]

Agree that customs duty is calculated on CIF. However, here's a little something that nobody has picked up on.  As Singapore is an ASEAN country there should be NO customs duty on items purchased in and shipped from Singapore to Thailand.

 

I regularly purchase items online, and ensure that the item is being shipped from an ASEAN country or China and in doing so I've never been charged customs duty.

Edited August 17, 2019 by TigerandDog
correction

[Tofer]

1 hour ago, TigerandDog said:

Agree that customs duty is calculated on CIF. However, here's a little something that nobody has picked up on.  As Singapore is an ASEAN country there should be NO customs duty on items purchased in and shipped from Singapore to Thailand.

 

I regularly purchase items online, and ensure that the item is being shipped from an ASEAN country or China and in doing so I've never been charged customs duty.

Nice one, thanks.

 

Does it make any difference to the rules if the item originated in a different country. The seller to me is a Singaporean trading company, but the product originated in USA?

[Gulfsailor]

1 hour ago, Tofer said:

Nice one, thanks.

 

Does it make any difference to the rules if the item originated in a different country. The seller to me is a Singaporean trading company, but the product originated in USA?

It’s the origin that matters, not where it’s shipped from. In order to get reduced tariffs under ASEAN or a certain trade agreement the goods must have a certificate of origin and (another specific form in Thailand’s case). Without those you are subject to the standard duties. 

Sometimes one gets lucky though. Specifically for low value or small items shipped via post.  

[sometimewoodworker]

On 8/15/2019 at 6:46 PM, Skunkworks said:

It should have been Delivered Duty Paid

Goods are virtually never delivered Duty Paid as the shipper can not guarantee the amount of duty and other charges that are going to be charged.

 

The difference is where there is no duty charged as from China.

 

Amazon is an exception and will charge an amount (usually a little in excess) to cover import costs and refund any overpayment.

[tifino]

On 8/15/2019 at 8:50 PM, damascase said:

Correct, based on the General Agreement on Tariffs and Trade, and detailed by the World Customs Organization.

https://www.wto.org/english/tratop_e/cusval_e/cusval_info_e.htm

 

... quite a read that! from the World Trade Organisation

 

but after all that, it now seems that Thai Customs is treating ASEAN (in concept)

 - as more like a NATO, than an EEC

 

 

another thing is that now one learns to firstly, never never Click the Expedite option when Shipping, as the $$$ really compound it further up.

 

Investigate the relative cost between a Singapore AirFreigt/Ship SeaMail, and what it costs for all to be chucked in the back of a dirty old Merc truck, as the FIP in each case would vary drastrically...

 

 

 

 

 

 

Edited August 18, 2019 by tifino

[Morty T]

On 8/15/2019 at 5:25 PM, Gulfsailor said:

Duty is levied on CIF value. Common around the world. I’m not aware of any country that does this differently. 

For articles dimensionally greater than 1 sqm, Thailand levys duty on CIF value PLUS the estimated cost of shipping, regardless of what has already been paid for shipping. Not common around the world. 

[Gulfsailor]

2 hours ago, Morty T said:

For articles dimensionally greater than 1 sqm, Thailand levys duty on CIF value PLUS the estimated cost of shipping, regardless of what has already been paid for shipping. Not common around the world. 

The F in CIF stands for Freight, so it is included, also in Thailand. 

Only if there is no freight or insurance cost specified in the documentation (or if the documented cost is unreasonably low) will customs assess a freight and insurance value. (Normal is 10% of cost of goods)

[damascase]

On 8/18/2019 at 3:12 AM, tifino said:

... quite a read that! from the World Trade Organisation

 

but after all that, it now seems that Thai Customs is treating ASEAN (in concept)

 - as more like a NATO, than an EEC

 

.........................

 

 

 

 

 

 

 

The concept of ASEAN is a Free Trade Zone, which implies - based on that same GATT - free trade of goods originating in other  countries in that zone. Different from the EEC - now EU - in that the latter is a Customs Union, in which the origin of goods in trade between Members is irrelevant. 

Edited August 19, 2019 by damascase
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