April 3, 2026

Duties, Taxes & Fees

In the Philippine importation process, costs are divided into duties, taxes, and fees. Understanding these components is essential for accurate landed cost computation and compliance with the Customs Modernization and Tariff Act.

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Duties

Duties are tariffs imposed on imported goods based on their classification under the ASEAN Harmonized Tariff Nomenclature (AHTN). These are calculated as a percentage of the customs value. Duties are collected by the Bureau of Customs and serve to protect domestic industries and generate government revenue.

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Taxes

Taxes refer to internal revenue charges applied to imported goods. The most common tax is the Value-Added Tax (VAT), currently set at 12%, computed based on the total landed cost including duties. Certain goods are also subject to excise taxes. While tax policies are administered by the Bureau of Internal Revenue, collection is carried out by customs at the point of importation.

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Fees

Fees are service-related charges incurred during cargo handling and processing. These include:

These are typically encountered during the release and delivery stage.

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Step-by-Step Cost Computation

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Step 1: Determine Customs Value (CIF Basis)

CIF = FOB (cost of goods) + Freight + Insurance. This is the foundation of all duty and tax computations.

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Step 2: Compute Import Duty

Import Duty = CIF × Duty Rate. Duty rates vary (0%–65%) depending on product classification. Preferential rates may apply with a Certificate of Origin.

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Step 3: Compute Other Charges

These may include excise tax (for alcohol, fuel, tobacco, vehicles) and customs processing fees.

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Step 4: Compute VAT

VAT = (CIF + Duty + Other Charges) × 12%

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Step 5: Identify Fees (Service Charges)

Fees are not part of customs taxes but must be paid for cargo release: arrastre, wharfage, storage, and demurrage.

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Step 6: Total Landed Cost

Total Landed Cost = CIF + Duty + Taxes + Fees

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A clear understanding of these cost components is essential for accurate pricing, profitability planning, and compliance with import regulations.