Import Duty Calculator

Behind the number

Import duty is the customs value × the duty rate for the commodity code. Everything difficult is in those two terms: what counts as customs value, and which code the goods fall under.

Customs value depends on the country's valuation basis. FOB countries: the United States, Canada, Australia, assess duty on the goods alone. CIF countries: the UK, the EU, India, New Zealand, add international freight and insurance first, so the same shipment attracts more duty for the same goods.

How that looks in practice

A shipment of 1,000 units at $18 FOB, $18,000, with $2,400 of sea freight and $95 of insurance. CIF value is $20,495.

On an FOB basis at 6.5%, duty is 0.065 × $18,000 = $1,170. On a CIF basis at the same rate, duty is 0.065 × $20,495 = $1,332.

The $162 difference is the duty rate applied to the freight and insurance. It scales with both: a shipment where freight is 30% of goods value pays roughly 30% more duty in a CIF country than in an FOB one, for identical goods at an identical rate.

Where this breaks down

Duty is only the first layer. Import VAT or GST is then charged on the duty-inclusive total in most systems, so a 6.5% duty in a 20% VAT country adds 6.5% and then 20% of the larger figure, the two compound rather than add.

The duty rate itself is also commodity-specific and can vary enormously within what a seller thinks of as one product category. Apparel commonly runs 10% to 16% where machinery runs 0% to 3%, and the difference between two similar-sounding codes can be ten percentage points.

What this changes

Establish the correct commodity code before the first shipment, not after. It determines the rate, it determines whether a preferential agreement applies, and a wrong code found later means back duty, penalties and a review of every prior entry.

Then build the duty into landed cost rather than treating it as a shipping charge. It is a cost of goods, it belongs in the margin calculation, and businesses that treat it as a logistics line consistently overstate their margins.

Preferential rates and rules of origin

Trade agreements reduce or remove duty for goods that originate in a partner country, and the saving is frequently the whole duty. On the example shipment that is $1,170 to $1,332 per container, enough to change which supplier is cheapest.

Origin is not where the goods shipped from. It is where they were produced or last substantially transformed, and each agreement defines that differently: usually by a change of tariff heading, a regional value content percentage, or a specific processing rule.

Claiming preference requires documentary proof: a certificate or declaration of origin in the required form, retained for the statutory period. Customs authorities audit these claims retrospectively, and a preference claimed without adequate evidence becomes back duty plus interest years later. The rule worth following is to get the origin documentation before the goods ship, because obtaining it from a supplier after payment has cleared is considerably harder.