Fundamentals of Computation of Duties and Taxes for Imported Goods

A. Basic Formula

Total Duties and Taxes = Customs Duty
+ Excise Tax (if applicable)

B. How to Arrive at Customs Duty

Customs Duty = Customs Value (Dutiable Value)
x Foreign Exchange Rate
x Rate of Duty
Dutiable Value = Cost of Goods
+ Freight
+ Insurance
+ Other Charges and Costs
Exchange Rate = As published weekly through Customs Memorandum Circular
Rate of Duty = As per classification of goods under AHTN, Section 104, TCCP

C. How to Arrive at Value Added Tax (VAT)

VAT = 12% of Total Landed Cost (TLC)
TLC = Dutiable Value
+ Bank Charges
+ Customs Duty
+ Brokerage Fee
+ Arrastre Charge
+ Wharfage Due
+ Customs Documentary Stamp (CDS)
+ Import Processing Fee (IPF)

D. CDS = Fixed Amount of P265.00

E. IPF Table per CAO 2-2001

DV of shipment IPF/entry
Up to P250,000 P 250.00
Over P250,000 to P500,000 P 500.00
Over P500,000 to P750,000 P 750.00
Over P750,000 P 1000.00

F. List of Articles subject to Excise Tax

G. Normal Computation for Motor Vehicles

Total Car Value = Book Value
+ Accessories (if any)
Depreciation Value = Total Car Value
– Depreciation (based on year model and cc)
Cost = Depreciation Value
x 80 (Less: 20% wholesale allowance/fixed)
Dutiable Value (in $) = Cost
+ Insurance
+ Freight
Customs Duty = Dutiable Value (in $)
x Rate of Exchange
x Rate of Duty
Landed Cost / AVT Base = Customs Duty
+ Dutiable Value in Php
+ Miscellaneous Expenses
Ad Valorem Tax = Landed Cost / AVT Base
x Rate of Ad Valorem Tax (under RA 9224)
Value Added Tax Base = Ad Valorem Tax
+ Landed Cost
Value Added Tax = Value Added Tax Base
x 12% (Rate of VAT)
Total Duties of Taxes = Customs Duty
+ Ad Valorem Tax