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Tofer

Customs duty conundrum

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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!

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

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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.

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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.

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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.

 

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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

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Posted (edited)

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 by Tofer

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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.

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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! 

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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.. 

 

 

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