April 3, 2026

Duties, Taxes & Fees

One of the most common challenges for businesses importing into the Philippines is accurately estimating the total cost of importation. The final landed cost of goods is typically higher than the purchase price alone, as it includes multiple layers of duties, taxes, and service fees.

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Component 1: Cost of Goods (FOB Value)

This is the starting point — the price of the goods as agreed with the supplier, typically expressed on a Free on Board (FOB) basis. It does not yet include freight or insurance.

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Component 2: Freight and Insurance

Freight costs depend on the mode of shipment (sea or air), the volume and weight of goods, and the origin country. Insurance, while sometimes optional, is recommended and is included in the customs value computation.

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FOB + Freight + Insurance = CIF Value (Customs Value Basis)

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Component 3: Customs Duty

Import Duty = CIF × Applicable Duty Rate. Duty rates under the AHTN range from 0% to 65% depending on the product classification. Preferential rates may apply if a valid Certificate of Origin is submitted under a Free Trade Agreement.

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Component 4: Value-Added Tax (VAT)

VAT = (CIF + Duty + Other Charges) × 12%. VAT is computed on top of the customs value and duty, meaning it is applied on a higher base than many importers expect. This is one of the most common areas where importers underestimate their total cost.

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Component 5: Excise Tax (if applicable)

Certain goods are subject to excise tax in addition to customs duty and VAT. These include alcohol, tobacco, petroleum products, and vehicles. Excise tax rates vary by product category.

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Component 6: Port and Handling Charges

These are charges imposed by port operators and are not part of customs taxes, but must be paid before goods are released. They include:

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Component 7: Customs Broker Fees

Professional fees for the licensed customs broker who prepares and files the goods declaration, coordinates with agencies, and manages the clearance process.

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Component 8: Trucking and Delivery

Transport from the port to the importer's warehouse or final destination.

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Sample Cost Breakdown

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Practical Insight

Always compute your total landed cost before committing to a pricing strategy. Basing prices on FOB value alone — without accounting for duties, VAT, and local charges — is one of the most common and costly mistakes importers make. Understanding the full cost structure from the beginning enables better pricing decisions and avoids financial surprises at the port.

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A licensed customs broker can help you compute accurate landed costs before your shipment arrives, ensuring that your importation is both financially planned and fully compliant.