Nowadays, importing or purchasing goods from abroad has become easier and more common, thanks to advancements in technology that make communication more convenient and faster. However, one major concern that often causes hesitation in deciding to import or purchase goods from other countries is the import duties that need to be paid. These duties depend on the customs officer's discretion in determining the preliminary customs value for tax calculation. So, what is customs value, how do customs officers determine it, and can we calculate it ourselves beforehand? This article will provide the answers.

What is Customs Value?

Customs value refers to the value set for goods to calculate import duties and taxes. This is defined by customs law under Ministry Regulation No. 132 (B.E. 2543) and other relevant regulations. The documents used to assess this include the goods receipt, purchase orders (invoices), and the term CIF, which stands for:

C = Cost (the product's cost) I = Insurance (insurance cost) F = Freight (shipping cost)

How is Customs Value Determined?

The cost used for customs value calculation in Thailand follows the GATT Valuation System (World Trade Organization - WTO). There are six methods for determining the customs value: Transaction Value: The actual transaction value paid by the buyer to the seller for the goods, including additional costs like materials, commissions, or rights.

Transaction Value of Identical Goods: The price of goods identical to the imported goods, both physically and in terms of quality, reputation, and country of origin, including insurance, shipping, and related costs until arrival at customs.

Transaction Value of Similar Goods: The price of goods similar to the imported goods, where the products share certain characteristics, such as composition or use, and the production country is the same.

Deductive Value: The price determined by subtracting certain costs (insurance, shipping, commissions, taxes, etc.) from the sale price in Thailand for identical or similar goods.

Computed Value: The value calculated from the cost of production, plus profit, packaging, insurance, shipping, and other costs related to shipping goods to Thailand.

Fallback Value: A price determined using a combination of methods 1-5, with flexibility for reasonable valuation.

Steps to Calculate Import Duties from Customs Value

Step 1: Calculate the customs value (CIF): CIF = Product Cost + Insurance + Shipping If there's no insurance cost, use 1% as a placeholder for the calculation. If shipping cost is not provided, the customs department’s rate is used.

Step 2: Calculate the import duty: Import Duty = CIF × Import Duty Rate

Step 3: Calculate the VAT (Value Added Tax): VAT = (CIF + Import Duty) × VAT Rate

Step 4: Final Calculation of Total Import Tax: Total Import Tax = Import Duty + VAT

Example Scenarios

Scenario 1: If the calculated customs value is less than 1,500 THB and complies with the customs regulations, no import duties need to be paid.

Scenario 2: If the customs value exceeds 1,500 THB, import duties and taxes must be paid as per the calculation above.

Calculating customs value is not as complicated as it may seem. Whether you’re a small business owner or an individual planning to import goods, you can use this method to estimate import taxes. Good products come from all over the world, and with the right support, issues like distance and shipping can be easily handled.

At CPLINTER, we are happy to assist with consulting on product shipment, including import-export services, packaging, document preparation, and customs procedures. For inquiries, feel free to contact us: Phone: 02-519-4426, 091-519-4426 Line: @cplinter Website: www.cplinter.com

Also, stay updated with our informative series CPL What is for more useful knowledge.