UNDERSTANDING FULL LANDED COST

man with receipt image
man with receipt image

AVOID SURPRISES, KNOW YOUR TOTAL COST

Most items are cheaper when buying online because they do not include all landed costs associated with importation.

Potential costs to bear in mind are:

  • CUSTOMS VALUE – Retail price and shipping
  • SHIPPING COSTS – It is important to understand if shipping costs are based on door-to-door service or exclude other charges. Freight forwarding costs are only port-to-port and then landed costs will be billed to you.
  • INSURANCE – Insurance on the shipment can sometimes be a separate cost
  • CUSTOMS DUTIES (TARIFFS) – Based on specific Harmonized System (HS) Codes
  • GOODS AND SERVICES TAX (GST) OR VALUE-ADDED TAX (VAT) – These are usually applied to the full Customs value of shipments, i.e. include shipping, insurance, and other related fees.
  • EXCISE DUTIES – Additional taxes may be imposed on certain goods, such as alcohol and tobacco
  • Other fees such as customs handling, payment and warehousing fees (if the shipment needs storage due to a customs hold or pending delivery), last mile delivery fees, installation fees.

TYPICAL EXAMPLE OF TOTAL COST

RETAIL PRICE

  • + DOOR-TO-DOOR SHIPPING COSTS (VIA POST OR EXPRESS DELIVERY)
  • + INSURANCE
  • + ANY ADDITIONAL FEES/CHARGES (SUCH AS UNPACKING, HANDLING, AND LAST ILE DELIVERY TRANSPORTATION CHARGES WHEN USING A FREIGHT FORWARDER)
  • + CUSTOMS DUTIES
  • + TAXES

= TOTAL LANDED COSTS

IMPORTING A HANDBAG FROM SINGAPORE TO VIETNAM

RETAIL PRICE

250

SHIPPING COST

INCLUDING FREIGHT & INSURANCE

30

CUSTOMS VALUE

[CUSTOMS VALUE = RETAIL PRICE + FREIGHT + INSURANCE]

280

CUSTOMS DUTY ON HANDBAG, leather
(25%) - HS 4202.21.00

Pursuant to ASEAN FTA (ATIGA) tariff of handbag is 0%. However, the good originates in France, and is hence levied a 25% duty.

[CUSTOMS VALUE = RETAIL PRICE + FREIGHT + INSURANCE]

70

SERVICE FEE

(an additional charge by freight forwarder or courier company for customs clearance and advance payment of duty and taxes on behalf of importer)

2

VAT (10%)

[VAT= (CUSTOMS VALUE + CUSTOMS DUTY + SERVICE FEE) X 10%]

35.1

TOTAL

[RETAIL PRICE + SHIPPING & INSURANCE COST + CUSTOMS DUTY + SERVICE FEE + VAT]

387.2