Import Duty And Freight Cost - Thailand

[Polanskiman]

I'm based in Bangkok. I have purchased a kneeling chair from the USA via internet since I couldn't find any in town.

DHL contacted me yesterday saying the shipment is on hold by the Thai Customs and that I need to pay some tax. I am aware that I need to pay the Custom Import Duty (20%) and VAT (7%). The problem is that they are basing their calculation for the Import Duty and VAT on a "Freight Zone" value (=590 Baht/Kg) instead of the real freight value that I paid:

Product Cost = 11,913 Baht

Paid Freight Cost = 3,023 Baht

Shipment Gross Weight = 16,3 Kg

Freight Cost Calculated by Customs = 591Baht/Kg = 9,634 Baht

Insurrance 1% of product cost = 119.13 Baht

So they are requiring me to pay a total of 4,333 Baht of Import Duty and 1,820 Baht of VAT

DHL is saying they can't do anything about it but I beleive this is a rip-off since they are basing their Duty Tax on some fixed figure given by the Customs and not of the real freight cost that I paid. Is this normal?

Thanks a lot for you answers

Edited January 25, 2012 by Polanskiman

[ShopBoy]

is 4,333 Baht inclusive of shipping charges ?

if yes i think there is nothing wrong.

[thrilled]

Thailand likes money.welcome to the country.

[pault17]

I think there IS something wrong, but it is not bad enough to make a fuss about.

A long time ago I read (on this forum?) about a scam where DHL and customs personel 'cooperated' on inflated custom charges. It happened to me and the charges were blatantly exagerated: THB 2000 import taxes + VAT for THB 500 for goods (less than 1 kg) and THB 3000 shipping. I told DHL about my suspicions and refused to pay. Within the hour DHL informed me that they would pick up the custom charges. For me this was sufficient proof that DHL is aware of this kind of irregularities.

[Polanskiman]

is 4,333 Baht inclusive of shipping charges ?

if yes i think there is nothing wrong.

4,333 Baht is the Import Duty they are requesting which is calculated as follows:

= 20% of (Product Cost + Freight Cost Calculated by Customs + Insurrance)

= 20% of (11,913 + 9,634 + 119.13)

= 4,333 Baht

The question is, why do they use some freight value calculated from some obscure source rather than using the the real freight cost I paid ?

[tpiety2]

You think that is bad!!!

I helped a thai friend order 100 purses from china 2 seperate times because the Chinese co. spoke only english or chinese but did not speak thai. The second order weighed 2 more kgs. because some of the purses were larger and weighed more.

She paid the exact same price for 2 seperate shipments, 2514.62 baht.

One shipment of 5 kg sent on Fed Ex with freight cost of 650 baht on and 25.15 baht ins. totaling

3189.77 cost for product, freight and insurance.

Customs duty of 10% for 318.98 baht and VAT of 245.61 baht with no disbursement fee or VAT totaling 564.59 baht in duty and taxes + the 3189.77 baht for a grand total

of 3424.27 baht.

The next shipment of 7 kg sent on UPS with freight cost of 910 baht on and 25.15 baht ins. totaling

3449.77 cost for product, freight and insurance.

Customs duty of 40% for 1379.91 baht and VAT of 338.08 baht a disbursement fee of 200 baht

with a VAT of 14 baht totaling 1931.99 baht in duty and taxes + the 3449.77 baht for a grand total

of 5381.76 baht.

Almost a 2000 baht difference?????????

Can anyone explain this duty disparity or how she can best address this action by thai customs which effectively raises her cost and prices her out of competitive business? She is an honest hard working thai trying to start a business and make a living.

[Polanskiman]

Anyone? I find it arbitrary and abusive to use their own freight value instead of the real one I paid to calculate the Import Duty. Is this the normal procedure here in Thailand? Should I call this State Legal Rip-off?

[p_brownstone]

You think that is bad!!!

I helped a thai friend order 100 purses from china 2 seperate times because the Chinese co. spoke only english or chinese but did not speak thai. The second order weighed 2 more kgs. because some of the purses were larger and weighed more.

She paid the exact same price for 2 seperate shipments, 2514.62 baht.

One shipment of 5 kg sent on Fed Ex with freight cost of 650 baht on and 25.15 baht ins. totaling

3189.77 cost for product, freight and insurance.

Customs duty of 10% for 318.98 baht and VAT of 245.61 baht with no disbursement fee or VAT totaling 564.59 baht in duty and taxes + the 3189.77 baht for a grand total

of 3424.27 baht.

The next shipment of 7 kg sent on UPS with freight cost of 910 baht on and 25.15 baht ins. totaling

3449.77 cost for product, freight and insurance.

Customs duty of 40% for 1379.91 baht and VAT of 338.08 baht a disbursement fee of 200 baht

with a VAT of 14 baht totaling 1931.99 baht in duty and taxes + the 3449.77 baht for a grand total

of 5381.76 baht.

Almost a 2000 baht difference?????????

Can anyone explain this duty disparity or how she can best address this action by thai customs which effectively raises her cost and prices her out of competitive business? She is an honest hard working thai trying to start a business and make a living.

The main disparity is clearly the Customs Duty.

Everything Imported into Thailand - and anywhere else really - is allocated an International Customs Tariff based on what description you use for the item, if you do not specify one the Customs Officer will allocate one based on his interpretation of what the item is. This Tariff Code is then used to decide what percentage of Duty will be charged on the item.

Obviously the two different Customs Officers who cleared these two shipments decided on different Tariff Codes and therefore different Duties.

You should have your friend look at the Import Entries - a document she should have received from the Courier Company when they delivered the shipments - to find this Code, then look up the description given to each in the Thai Customs Department website which lists these Codes (sorry I don't have the Link). Then you have to decide which of the two is more applicable or correct in your view and for future shipments make sure you tell the Courier Company what Tariff Code you believe is correct.

The Customs Officer may not agree with you of course and in that case it's best to arrange a meeting to try to persuade him. The good thing is that once you Import under the Tariff Code you want then you can use that Import Entry document to show the Customs Officer when next you Import the same items and they usually accept that as a precedent.

If this is going to be an ongoing Business for your friend it would be best if she appoints her own Customs Clearing Company. Courier Companies have no real interest in negotiating with the Customs Department - after all they simply pass on to the Customer whatever Duty charge the Customs Officer applies.

Patrick

[CWMcMurray]

OP.... unfortunately yes, this is the case in Thailand for shipments being imported via courier mode.

Thai customs sets up a min freight charges per kg from every origin country and when calculating CIF Value fo Goods for calculation of duty and vat, you must use their "freight charge" calculations.

If sent via Airfrfeight mode, this is not the same... for airfreight mode, you can show the actual freight charges on the HAWB or you can submit the Invoice of freight charges from your forwarder in Thailand and customs will allow this as the actual freight charges for calculation of import duty and vat.

But if no freight charges ont he HAWB and no freight invoice, then they will make you use the freight charges shown on the MAWBwhich are IATA rates and likely to be much higher than actual freight costs paid.

If sea freight, you can also use the freight invoice method or if not, the Thai customs will use 10% invoice value for calculation of freight charges.

Another alternative if the freight is prepaid at the origin is to have the freight charges shown on the shipper's invoice and the cost of goods shown as CIF Value.

Of course if the charges are very low, Thai customs always reserves the right to use their own formula.... but to be honest 99% of the time this is not an issue with most compaies importing goods via freight mode, as they have their own internal policies to require that actual charges shown on Shipper's invoice or HAWB or Forwarder's invoice match actual amounts paid by their accounting department.

Edited January 26, 2012 by CWMcMurray

[Polanskiman]

OP.... unfortunately yes, this is the case in Thailand for shipments being imported via courier mode.

Thai customs sets up a min freight charges per kg from every origin country and when calculating CIF Value fo Goods for calculation of duty and vat, you must use their "freight charge" calculations.

If sent via Airfrfeight mode, this is not the same... for airfreight mode, you can show the actual freight charges on the HAWB or you can submit the Invoice of freight charges from your forwarder in Thailand and customs will allow this as the actual freight charges for calculation of import duty and vat.

But if no freight charges ont he HAWB and no freight invoice, then they will make you use the freight charges shown on the MAWBwhich are IATA rates and likely to be much higher than actual freight costs paid.

If sea freight, you can also use the freight invoice method or if not, the Thai customs will use 10% invoice value for calculation of freight charges.

Another alternative if the freight is prepaid at the origin is to have the freight charges shown on the shipper's invoice and the cost of goods shown as CIF Value.

Of course if the charges are very low, Thai customs always reserves the right to use their own formula.... but to be honest 99% of the time this is not an issue.

CWMcMurray,

Thanks a lot for the time you took to answer.

Indeed the Invoice sent to me by DHL only mentions the product value and it is not mentionned CIF. I guess the shop where I bought the chair should have included the freight cost so to avoid this problem.

The shipment was sent by air an even though I sent DHL the prove that I already paid the Freight to the online shop, they don't want to hear anything. What I don't understand is that I beleive the freight charges were prepaid at the origin so honestly DHL should have mentionned this at some point but they keep insisting that they can't do anything about it and that I have to comply with the Customs way of calculating things. Either DHL is not doing its job, either DHL is colluding with the customs to make cash. Am I missing something or did I do something wrong in the process?

Edited January 26, 2012 by Polanskiman

[impulse]

One shipment of 5 kg

Customs duty of 10%

The next shipment of 7 kg

Customs duty of 40%

That sounds suspiciously like a customs duty of 10% and a "luxury tax" of 30% added to only one of the shipments. One customs agent's "plain old handbags" is another one's "luxury handbag".

Edited January 26, 2012 by impulse

[Polanskiman]

OP.... unfortunately yes, this is the case in Thailand for shipments being imported via courier mode.

Thai customs sets up a min freight charges per kg from every origin country and when calculating CIF Value fo Goods for calculation of duty and vat, you must use their "freight charge" calculations.

If sent via Airfrfeight mode, this is not the same... for airfreight mode, you can show the actual freight charges on the HAWB or you can submit the Invoice of freight charges from your forwarder in Thailand and customs will allow this as the actual freight charges for calculation of import duty and vat.

But if no freight charges ont he HAWB and no freight invoice, then they will make you use the freight charges shown on the MAWBwhich are IATA rates and likely to be much higher than actual freight costs paid.

If sea freight, you can also use the freight invoice method or if not, the Thai customs will use 10% invoice value for calculation of freight charges.

Another alternative if the freight is prepaid at the origin is to have the freight charges shown on the shipper's invoice and the cost of goods shown as CIF Value.

Of course if the charges are very low, Thai customs always reserves the right to use their own formula.... but to be honest 99% of the time this is not an issue.

CWMcMurray,

Thanks a lot for the time you took to answer.

Indeed the Invoice sent to me by DHL only mentions the product value and it is not mentionned CIF. I guess the shop where I bought the chair should have included the freight cost so to avoid this problem.

The shipment was sent by air an even though I sent DHL the prove that I already paid the Freight to the online shop, they don't want to hear anything. What I don't understand is that I beleive the freight charges were prepaid at the origin so honestly DHL should have mentionned this at some point but they keep insisting that they can't do anything about it and that I have to comply with the Customs way of calculating things. Either DHL is not doing its job, either DHL is colluding with the customs to make cash. Am I missing something or did I do something wrong in the process?

I just hang-up with DHL and they told me that DHL doesn't declare the value of the shipment to the Customs. I was honestly surprised. Is this normal practice/legal?

Edited January 26, 2012 by Polanskiman

[p_brownstone]

Either DHL is not doing its job, either DHL is colluding with the customs to make cash. Am I missing something or did I do something wrong in the process?

It is not DHL's job to negotiate with the Customs Department on your behalf - they are a Courier Company and simply pass on to you, the Customer, whatever Duty or other charges the Customs Officer decides upon, they have no reason to take on extra work. Also, provided you get an official Receipt - a yellow form - from the Customs Department forr the Duty and V.A.T. there is no chance that DHL is making any money out of these charges.

If you wish to dispute the calculation get the name of the Customs Officer and arrange an appointment yourself to explain your case.

Patrick

[Polanskiman]

Either DHL is not doing its job, either DHL is colluding with the customs to make cash. Am I missing something or did I do something wrong in the process?

It is not DHL's job to negotiate with the Customs Department on your behalf - they are a Courier Company and simply pass on to you, the Customer, whatever Duty or other charges the Customs Officer decides upon, they have no reason to take on extra work. Also, provided you get an official Receipt - a yellow form - from the Customs Department forr the Duty and V.A.T. there is no chance that DHL is making any money out of these charges.

If you wish to dispute the calculation get the name of the Customs Officer and arrange an appointment yourself to explain your case.

Patrick

Patrick,

It is not DHL's job to negotiate with the Customs Department on my behalf, I agree, but it is certainly DHL's job not to omit information. I paid for the freight before the shipment even left the shop store in the USA 2 weeks ago, so I beleive DHL's do have the Freight value of my shipment and should mention it somewhere, or am I naive!?

I had a heated conversation with DHL's complaints department yesterday. They finally admited that they indeed have the Freight Value and that they will recalculate the Custom Duty and VAT and submit the proper figure to the customs and to me. They were initially trying to lose me in some criptic reasoning that DHL USA and DHL Thailand are not the same entities and that DHL never mentions any Freight Charges on the AWB. I really got mad to here this kind of BS. This is why I beleive they are colluding with the Customs. DHL might not be doing any cash, but they are winning the favors of the Customs who can happily apply their own rates and consequently make more cash on the back of the end-customer.

[CWMcMurray]

It is possible to use the actual freight rate instead of the customs calculated freight rate if DHL submits the freight invoice along with customs, but it is likely that they do not have this readily available in the department that is in charge of declaring with customs.

So they would need to request this information from another department and wait to receive it and then recalculate taxes...

The short answer is that they do not want to do this as it takes them more time. DHL makes money on volume and their goal is to spend as little time as abosutely possible on each indivual shipment. So the customs system with one price from every origin works very well for them and allows them to streamline and simplify their customs process, as they do not need to then try and track down the selling rate for every individual customer from every origin in the world, print out freight invoice and input this information into the customs documents.

Same thing with tariff codes... there are many many cases where goods from DHL are misdeclared and customers will then have to go back revise import entries at a later date. Their entire business model is set up to offer lower costs based upon high volume and low service.

This is why many companies will use DHL for freight of small shipments but use their own customs broker for clearance and delivery.