Are freight charges added to the shipping invoice for calculating the import duty?

International trade most commonly used accounting methods for charging duties at border crossings or ports of entry are:

Free on Board (FOB) and Cost Insurance and Freight (CIF) these two inconspicuous terms refer to the terms of sale commonly used in world commerce and known as X sales point.

1.- FOB point of sale is on board the vessel free of any other charges to the buyer.

2.- CIF point of sale means the seller includes the cost of freight and insurance.

There is however a subset of conditions mainly set by carriers that must be paid by either the seller or the buyer.  In general terms--from the perspective of the carrier-- define which services are provided under the terms of carriage. For example, loading and unloading of the cargo, stowage or trimming and whether materials need to be used to secured cargo on board such as dunnage. The following terms apply to mainly bulk and break bulk cargoes as containers have another sub-set of costs charged by either a cargo consolidator or a freight forwarder but not included the scope of this writing.

FILO (Free In- Liner- Out): Buyer or seller pays for loading and carrier pays for unloading.

FIO (Free- In- Out): Carrier pays for loading and unloading

FIOS (Free- In Out- Stowed): Carrier pays for loading, unloading and stowage of cargo

FIOST (Free In- Out –Stowed- Trimmed): Carrier pays for loading, unloading, stowage and trim of cargo

FIOT (Free In -Out Trimmed): Carrier pays for loading, unloading and trimming of cargo

FLT (Full- Liner- Terms): Carrier pays for loading, trimming and stowage at port of origin and unloading at the port of destination.

LIFO (Liner In- Free Out): Carrier pays for loading at port of origin buyer pays for unloading at destination.

Moreover, it is important to consider total shipment costs when adding duties, taxes, port handling fees and other fees for a particular cargo. Duties are also influenced by the content of the cargo and the destination port. These charges will affect the price the buyer might be willing to pay for a given product known as the "landed" cost of the merchandise.

Besides, most international transactions are subject to the assessment of duties and taxes imposed by the importing country's government. A shipment's duty and tax amount may be assessed by:

·         Product value

·         Trade agreements

·         Country of manufacture

·         Use of the product

·         The product's Harmonized System (HS) code based primarily on three factors:

·         What an item is?

·         What it is made of?

·         What it is used for?

Value-Added Tax (VAT) or Goods and Services Tax (GST)

International commerce also has some exemptions to the taxes and regulations described herein but it can vary within individual country’s policies.

These items are temporarily imported duty free as long as certain conditions are met and procedures are followed.

For instance items destined to:

·         Entre- Port warehousing

·         Tradeshows

·         Conventions

·         Training

·         Assembly

·         Processing

·         Re-export after resale

·         Repair or replacement of damaged goods

Declared Value for Customs duties, taxes or exemption for invoiced items are stated in a Customs official shipment’s declared value along with the description of the goods.

Inaccurate declared value is one of the most prevalent reasons for duty and tax disputes among buyers, sellers and authorities engaged in world commerce.