Key Takeaways

• Customs Value is an important basis for calculating import duties on imported goods.
• For preliminary cost estimates, the CIF concept is commonly used, comprising Cost + Insurance + Freight.
• Duty rates depend on more than just the goods’ value; the HS Code and any preferential tariff benefits must also be checked.
• After import duty is calculated, VAT, excise tax, or other taxes may still apply depending on the type of goods.
• The price shown on a Commercial Invoice is not necessarily the final Customs Value in every case.

When importing goods from overseas, businesses often begin their cost calculations with the price quoted by the Supplier. However, the product price alone does not represent the full cost incurred when the goods arrive in Thailand.

In addition to Freight, Insurance, Handling, and other Logistics costs, import duties and taxes must also be included when calculating Landed Cost.

One term commonly encountered in this process is Customs Value, which many people are familiar with in the form of the CIF price.

Understanding how to calculate these costs before ordering helps businesses estimate their actual expenses more accurately and reduces the risk of discovering that post-clearance costs are higher than planned.

What Is Customs Value?

Customs Value is the value used as the basis for calculating duties on imported goods. It must be determined according to the applicable Customs Valuation rules.

For imports, do not assume that the price stated by the Supplier on the Invoice will be used directly in every case. Other components or adjustments may need to be considered under Customs Valuation rules.

Relevant information may include:

• Product price
• Freight
• Insurance
• Incoterms
• Currency
• Certain types of Commission
• Packing Cost
• Royalty or License Fee in some cases
• Other costs that must be adjusted according to the applicable rules

Customs Value should therefore be determined based on the actual facts of the Transaction, not by choosing an arbitrary figure to reduce taxes.

What Is CIF?

CIF stands for:

• C – Cost = Product price
• I – Insurance = Insurance cost
• F – Freight = Transportation cost

In simplified form:

CIF = Cost + Insurance + Freight

Example:

Product price = THB 100,000
Insurance = THB 2,000
Freight = THB 10,000

Therefore:

CIF = 100,000 + 2,000 + 10,000

CIF = THB 112,000

This figure can be used as a starting point for understanding the basis of import taxation. However, an actual Customs Declaration must also take into account the applicable Customs Valuation rules and the details of the specific Transaction.

Are CIF Under Incoterms and CIF for Customs Value the Same?

They are related, but should not be treated as exactly the same thing in every respect.

CIF Under Incoterms

CIF, or Cost, Insurance and Freight, is an Incoterm that defines the responsibilities, costs, and risks between the Seller and Buyer for sea and inland waterway transport.

CIF in the Context of Customs Value

This refers to the concept of a value that includes Cost, Insurance, and Freight, used as part of the valuation of imported goods.

An Invoice for a transaction under the CIF Incoterm may already include Cost, Insurance, and Freight. However, if the transaction is under EXW, FOB, or another Incoterm, relevant costs may need to be considered additionally when determining the Customs Value basis.

Suggested Internal Link: What Are Incoterms? Understand International Trade Terms Before Importing or Exporting

Why Should You Know the Customs Value Before Importing Goods?

Because Customs Value affects Import Duty and the total cost of the goods.

For example, a Supplier quotes a product price of THB 100,000.

If the business calculates only:

Product price + Freight

but fails to account for:

• Import Duty
• VAT
• Customs Clearance
• Destination Handling
• Delivery
• Permit
• Warehouse

the actual cost per Unit may be higher than the amount used to set the selling price.

Landed Cost should therefore be estimated before issuing a Purchase Order, especially for Commercial Shipments.

4 Steps to Calculate Import Taxes

A preliminary calculation can be divided into four steps.

Step 1: Calculate Customs Value or CIF

Start by determining the value used as the tax basis.

Example:

• Cost = THB 100,000
• Insurance = THB 2,000
• Freight = THB 10,000

Therefore:

CIF = THB 112,000

For an actual Shipment, if the Invoice is in a foreign currency, convert it into Thai baht according to the rules and exchange rate applicable to Customs procedures.

Do not automatically substitute an exchange rate from a bank or Google when preparing a Customs Declaration.

Step 2: Check the HS Code and Import Duty Rate

Once the Customs Value is known, determine the HS Code for the goods.

The HS Code determines important information such as:

• Import Duty Rate
• Permits
• Import measures
• FTA eligibility
• Product-specific taxes or requirements

Assume, for this example, that the goods have an import duty rate of 10%.

The calculation is:

Import Duty = CIF × Duty Rate

112,000 × 10% = THB 11,200

Therefore, the import duty is:

THB 11,200

The 10% rate in this example is hypothetical and is not the rate for all types of goods.

Suggested Internal Link: Why Is the HS Code Important?

Step 3: Check Other Taxes or Duties Applicable to the Goods

Some goods may be subject to more than import duty and VAT.

Depending on the law, other taxes or trade-related charges may apply, such as:

• Excise Tax
• Interior Tax, where applicable
• Anti-Dumping Duty
• Safeguard Measures
• Other trade measures

For goods subject to a special tax regime, do not simply apply the general formula of CIF + Import Duty + VAT and assume that this represents all taxes.

Before importing, check the classification and measures applicable to the relevant HS Code.

Step 4: Calculate VAT

After calculating Import Duty and any other applicable taxes, calculate VAT using the tax base prescribed by law.

For this simplified example:

• CIF = THB 112,000
• Import Duty = THB 11,200
• No Excise Tax or other taxes

The VAT base is:

112,000 + 11,200 = THB 123,200

Using a VAT rate of 7% for this example:

VAT = 123,200 × 7%

VAT = THB 8,624

The taxes in this example are therefore:

Import Duty = THB 11,200
VAT = THB 8,624

Total = THB 19,824

This shows why a product price of THB 100,000 does not mean that the cost when the goods reach the Warehouse will remain THB 100,000.

Complete Example: Calculating Import Taxes in Four Steps

Assume one Shipment has the following details:

Cost: THB 100,000
Insurance: THB 2,000
Freight: THB 10,000
Import Duty Rate: 10%
VAT: 7%
No other taxes in this example

1. Calculate CIF

100,000 + 2,000 + 10,000

= THB 112,000

2. Calculate Import Duty

112,000 × 10%

= THB 11,200

3. Check Other Taxes

This example assumes there is no Excise Tax or other tax.

= THB 0

4. Calculate VAT

(112,000 + 11,200) × 7%

= THB 8,624

Therefore:

Import Duty + VAT = THB 19,824

Adding the product price, Freight, Insurance, and taxes:

112,000 + 19,824 = THB 131,824

However, this is not yet the final Landed Cost if other Logistics costs remain to be added.

How Is Landed Cost Different from CIF?

CIF and Landed Cost are not the same figure.

CIF

Primarily includes:

Cost + Insurance + Freight

Landed Cost

This is the total cost a business incurs to bring goods to the point where they can actually be sold or used.

It may include:

• Product Cost
• Freight
• Insurance
• Import Duty
• VAT
• Excise Tax, where applicable
• Origin Charge
• Destination Charge
• Customs Clearance
• Permit
• Warehouse
• Delivery
• Bank Fee
• Other costs

Businesses setting selling prices should therefore consider Landed Cost rather than looking only at CIF.

If the Commercial Invoice States CIF, Can It Be Used Directly as the Customs Value?

This should not be assumed in every case.

Even if the Invoice specifies the CIF Incoterm and clearly states the Invoice Value, Customs will still assess the value according to Customs Valuation rules.

Information that may need to be checked includes:

• Whether the Buyer and Seller are related
• Whether there are costs that must be added
• Whether any Royalty or License Fee applies
• Whether the Buyer provided any Assist or other value
• Whether the declared price reflects the actual transaction price
• The terms and conditions of the Transaction

The Invoice is an important document, but the figure shown on it is not automatically accepted as the Customs Value in every case.

How Many Customs Valuation Methods Are There?

Customs Valuation uses several principal methods in a prescribed sequence. The actual transaction price is considered first. If it cannot be used, other methods are considered according to the applicable rules.

The main methods are:

1. Transaction Value

Uses the price paid or payable for the imported goods, subject to relevant adjustments.

2. Transaction Value of Identical Goods

Uses the transaction value of identical goods as a basis for comparison.

3. Transaction Value of Similar Goods

Uses the transaction value of similar goods.

4. Deductive Value

Works backward from the domestic selling price, deducting costs according to the applicable rules.

5. Computed Value

Calculates value based on production costs, profit, and related expenses.

6. Fallback Method

Uses an appropriate approach consistent with Customs Valuation principles when the preceding methods cannot be applied.

Customs Value is therefore not a figure that an importer can set arbitrarily.

Why Might the Value Used by Customs Differ from the Purchase Price?

There are several possible reasons, including:

• Different Incoterms
• Freight not included in the Invoice
• Insurance not included
• Packing costs or other costs requiring adjustment
• Royalty
• A relationship between Buyer and Seller
• A Proforma Invoice rather than a final Commercial Invoice
• A Free of Charge Shipment
• A Sample
• Used goods
• Goods that are not part of a normal sale

These situations may require additional information to determine the Customs Value.

Are Free Goods, Samples, or Supplier-Provided Items Exempt from Taxes?

Do not assume that goods are tax-exempt simply because they are marked Free of Charge.

Even if the Buyer does not pay the Supplier, the goods may still have a Customs Value for import purposes.

Examples include:

• Free Sample
• Warranty Replacement
• Promotional Goods
• Spare Parts supplied free of charge
• Business Gifts

The goods must still be declared with details and a value in accordance with Customs rules.

“No selling price” does not mean “no Customs Value.”

How Can an FTA Reduce Import Duty?

If Thailand has an FTA with the country of origin and the goods meet the Rules of Origin, they may qualify for a Preferential Tariff lower than the normal rate.

Hypothetical example:

CIF = THB 112,000

Normal rate = 10%

If the applicable FTA rate is 0%, Import Duty may decrease from:

THB 11,200 → THB 0

However, VAT and any other taxes required by law must still be checked.

To use an FTA, verify:

• HS Code
• Country of Origin
• Rules of Origin
• Tariff Rate
• Proof of Origin

Do not determine eligibility solely by checking the Supplier’s country.

Suggested Internal Link: What Is a Certificate of Origin? Learn About C/O Types and Required Documents

Does Having a Certificate of Origin Mean Import Tax Will Be 0%?

Not always.

A Certificate of Origin proves Origin according to the applicable conditions, but the Import Duty Rate must still be checked against the product’s Tariff Schedule.

Possible outcomes include:

• The rate falls from 20% to 0%
• The rate falls from 10% to 5%
• The normal rate is already 0%
• The goods are not eligible for preferential treatment
• The goods do not meet the Rules of Origin

Having a C/O should therefore not be interpreted as meaning “no tax is payable.”

Does 0% Import Duty Mean No Taxes at All?

No.

A 0% Duty rate means that the import duty for that item may be 0% under the applicable conditions.

However, the Shipment may still incur:

• VAT
• Excise Tax
• Other taxes
• Customs Clearance
• Handling
• Logistics Costs

Therefore, “this product has 0% Duty” and “importing it involves no costs” are two different things.

How Can an Incorrect HS Code Affect Taxes?

The HS Code directly affects tax calculations.

Incorrect classification may result in:

• An incorrect Duty Rate
• Incorrect use of an FTA
• Incorrect Permit requirements
• Incorrect import measures
• Incorrect cost calculations
• The need to amend a Customs Declaration

For example, two products may have the same purchase price, but one HS Code may have a 0% Duty rate while another has a 10% rate. Their import costs would therefore differ immediately.

Check the HS Code before calculating Landed Cost.

Which Exchange Rate Is Used to Calculate Import Taxes?

If the Invoice is in USD, EUR, JPY, CNY, or another foreign currency, it must be converted into Thai baht for Customs procedures using the exchange rate applicable to those procedures.

The rate used in a Customs Declaration may therefore differ from the rate shown by:

• Google
• Mobile Banking
• Credit Cards
• Currency Exchange Booths

Businesses estimating costs in advance should also allow for Exchange Rate fluctuations.

How Do Incoterms Affect CIF Calculations?

Incoterms help determine which costs are already included in the Invoice price.

For example:

EXW

The Supplier’s price may not include costs incurred from collecting the goods at the factory onward, so Freight and origin costs should be checked separately.

FOB

The Seller handles the goods within the FOB scope, while Freight and Insurance to Thailand may still need to be considered.

CIF

The Invoice generally includes Cost, Insurance, and Freight within the Incoterm’s scope, but Customs Valuation must still be checked.

Do not use the same formula without considering the Incoterms applicable to the Transaction.

Are Import Taxes and Freight the Same Cost?

No.

Freight is the cost of transportation services.

Import Duty and Tax are tax costs arising from the importation of goods.

Other costs may also apply, including:

• Customs Clearance Fee
• Handling
• Terminal Charge
• Delivery Order
• Storage
• Truck Delivery
• Remote Area charges
• Permit

Before comparing Freight Quotes, check exactly which costs are included in the quoted price.

Does Door to Door Include Import Taxes?

Not necessarily.

Door to Door describes the Service Scope: transportation from the origin Address to the destination Address. It does not automatically mean that Import Duty and VAT are included in the price.

Check whether the Quote includes:

• Duty
• Tax
• Import Customs Clearance
• Destination Charges

Do not assume that Door to Door means All Inclusive.

Suggested Internal Link: What Is the Difference Between Door to Door, Door to Port, and Port to Port?

Once You Have Calculated Taxes, Do You Know the Actual Cost?

Not completely.

Businesses setting selling prices should also calculate Landed Cost.

For example:

**Product Price

• Origin Cost
• Freight
• Insurance
• Import Duty
• VAT
• Customs Clearance
• Handling
• Warehouse
• Delivery
  = Landed Cost**

Then divide by the number of units actually available for sale to determine the Cost per Unit.

This helps businesses estimate their Margin more accurately than using only the Supplier’s purchase price.

What Information Should You Prepare to Calculate Import Taxes?

At a minimum, prepare:

• Product Description
• Product photos
• Material
• Function / Usage
• Product Specification
• Country of Origin
• Country of Export
• HS Code, if already checked
• Product Value
• Currency
• Quantity
• Incoterms
• Freight
• Insurance
• Certificate of Origin, where applicable
• Permit, depending on the product

The more detailed the product information, the more accurately the HS Code and estimated Duty can be checked.

Avoid using only broad descriptions such as:

“Spare Parts”

“Machinery”

“Electrical Equipment”

Products within the same broad category may have different HS Codes and duty rates.

Frequently Asked Questions About Customs Value and CIF (FAQ)

Does CIF Mean the Product Price Plus Transportation Costs?

CIF includes Cost, Insurance, and Freight. It therefore includes more than just the product price and transportation cost; Insurance is also part of the CIF components.

Does Customs Calculate Tax Directly from the Invoice Price?

Not necessarily in every case. The Invoice is important, but Customs Value must comply with Customs Valuation rules, and some items may require adjustment or further consideration.

Do Goods with a 0% Duty Rate Still Incur VAT?

A 0% import duty rate does not automatically exempt the goods from VAT. The taxes applicable to the goods must be checked separately.

If I Have Form E or Form D, Does That Mean No Tax Is Payable?

Not always. Check the HS Code, Tariff Rate, and Rules of Origin under the relevant FTA to determine the applicable preferential rate.

Does Freight Affect Import Taxes?

Yes. Freight is one of the components relevant to determining the CIF value used in preliminary import-cost estimates.

Why Does a Freight Forwarder Need the Invoice Before Estimating Taxes?

The Invoice contains important information such as price, Currency, Seller, Buyer, Product, and Incoterms. These details are considered alongside the product information, HS Code, Freight, and Origin when estimating costs and preparing for Customs Clearance.

Import and Customs Clearance Services with CPL INTER

CPL INTER provides international import transportation by air, sea, and road, along with Shipping Documents and Customs Clearance services according to the Shipment’s Service Scope.

To estimate import costs, prepare the product name, photos, Product Specification, Commercial Invoice, Packing List, HS Code if available, Country of Origin, Incoterms, dimensions, weight, and origin and destination details. The CPL INTER team can help review the relevant information before Booking.

Tel: 02-519-4426 / 091-519-4426
LINE: @cplinter

Written by: CPL Inter Logistics Operations Team, specialists in international shipping and customs clearance, with more than 15 years of experience and an internationally recognized ISO 9001:2015 quality management system.