Our company was just hit by import duty on freight. 30% duty on the goods and 30% on the cost of freight + 7% VAT. <deleted>........ .is this normal Maybe we should change shipping agent. Any recommendations ?

Air or sea?

Some have said that the shipping agents provide fake invoice data to jack up what you have to pay. Is it possible they have colluded with the customs people. You should go direct to the customs house and check the tax. Also suggest that you talk to another freight handler.

"is this normal"

yes it is the done thing in most countries.

"Some have said that the shipping agents provide fake invoice data to jack up what you have to pay. Is it possible they have colluded with the customs people."

foreign shipping agents "collude" with thai customs people? :lol:

What are you bringing in? 30% is pretty normal for most luxury goods.

You can get official receipts from customs. Been doing this for 11 years. One cannot collude with customs, they don't need assistance

Air or sea?

Sea

You can get official receipts from customs. Been doing this for 11 years. One cannot collude with customs, they don't need assistance

So, do you also pay import duty on the cost of freight ?

What are you bringing in? 30% is pretty normal for most luxury goods.

Yes, I'm ok with 30% import duty on the goods (food stuff), but how do they figure out the 30% duty on freight ? 7% VAT on freight is bad enough, but do they expect us to resell the cost of freight or what ? Freight is not in the official list of dutiable items/goods....go figure...

What are you bringing in? 30% is pretty normal for most luxury goods.

Yes, I'm ok with 30% import duty on the goods (food stuff), but how do they figure out the 30% duty on freight ? 7% VAT on freight is bad enough, but do they expect us to resell the cost of freight or what ? Freight is not in the official list of dutiable items/goods....go figure...

Customs (Import) Duty in Thailand - and so far as I am aware, anywhere in the world - is charged on the total C.I.F. value of the goods (that is the total of Cost + Insurance + Freight), VAT is also charged on the same basis.

You have to recoup the Customs Duty by including it in the "Landed Cost", of the item, to which you add whatever Profit Margin you want to make when you sell the item.

For the V.A.T. charges, you reclaim this every month when you submit your V.A.T. documentation to the Revenue Department - assuming your Company turnover exceeds Baht 1.8 million per year - that's the level at which your Company must be Registered for V.A.T. and get your Company PP20.

However I would add that 30% Import Duty seems very high, with various Free Trade Agreements signed between Countries over the last few years most items I Import (Industrial equipment however - not food) are charged at between 0% and 10% you should check with your Shipping Agent and ask what Harmonised Customs Tarrif number they are using (this is usually an 8 Digit number) then ask another Shipping Agent what the Customs Duty is on that Tarrif Code - just to check.

Patrick

What are you bringing in? 30% is pretty normal for most luxury goods.

Yes, I'm ok with 30% import duty on the goods (food stuff), but how do they figure out the 30% duty on freight ? 7% VAT on freight is bad enough, but do they expect us to resell the cost of freight or what ? Freight is not in the official list of dutiable items/goods....go figure...

Customs (Import) Duty in Thailand - and so far as I am aware, anywhere in the world - is charged on the total C.I.F. value of the goods (that is the total of Cost + Insurance + Freight), VAT is also charged on the same basis.

You have to recoup the Customs Duty by including it in the "Landed Cost", of the item, to which you add whatever Profit Margin you want to make when you sell the item.

For the V.A.T. charges, you reclaim this every month when you submit your V.A.T. documentation to the Revenue Department - assuming your Company turnover exceeds Baht 1.8 million per year - that's the level at which your Company must be Registered for V.A.T. and get your Company PP20.

However I would add that 30% Import Duty seems very high, with various Free Trade Agreements signed between Countries over the last few years most items I Import (Industrial equipment however - not food) are charged at between 0% and 10% you should check with your Shipping Agent and ask what Harmonised Customs Tarrif number they are using (this is usually an 8 Digit number) then ask another Shipping Agent what the Customs Duty is on that Tarrif Code - just to check.

Patrick

OK, thank you Patrick. That's really great information

Is the VAT charged for the entire freight + duty amount or only for the duty part?

As far as I know freight and other transportation costs are VAT exempt but not the duty paid for the transport costs.

opalhort

Yes, some good responses there

Is the VAT charged for the entire freight + duty amount or only for the duty part?

As far as I know freight and other transportation costs are VAT exempt but not the duty paid for the transport costs.

opalhort

No - the Thai Customs Department calculates VAT on total C.I.F. value.

They will take the US $ (or other Currency) Cost per Item - as shown on the Commercial Invoice and add to that an "Ex Works" Charge (shown on the AWB as Packing Costs) and a "Freight Charge" (shown on the AWB as "Other Charges"), they will also add a "notional" Insurance Charge calculated at 1% of the US $ Commercial Invoice amount plus the "Packing Costs" to give a Total US $ Cost per Item ("call it US $ CPI")

This "US $ CPI" is then multiplied by the Relevant Baht Exchange Rate to convert it to local currency (call it "CPI in Baht") that total is then multiplied by the relevant Harmonised Customs Tarrif percentage to arrive at the amount of Import Duty for the item (call it "ID").

"CPI in Baht" is added to "ID" and that total multiplied by the VAT Rate currently 7% (call it "VAT")

This calculation is shown on the Customs Import Entry form, based upon that Form the Importer has to pay "CPI in Baht" and "VAT" to the Thai Customs Department for which he will receive a Receipt detailing the 2 amounts.

At the end of each month the Importer can claim back the "VAT" from the Revenue Department when he submits his monthly VAT returns

The "ID" however remains a Cost to the Importer and should be added to the Landed Cost of the item before calculating the required Profit Margin on Sales.

Patrick

Again, a very thorough reply. Many thanks !