Duty is charged on your freight, and the Incoterm decides whether it is
A duty rate is a percentage, so the argument is never about the rate. It is about what the rate is a percentage of. That number is the customs value, and on the same shipment it can legitimately be three different figures depending on the Incoterm the sale was struck under.
Take 20,000.00 of goods, 2,400.00 of international freight and 180.00 of marine insurance, at a 6.5% duty rate.
| Basis | What it includes | Dutiable value | Duty at 6.5% |
|---|---|---|---|
| FOB | Goods only | 20,000.00 | 1,300.00 |
| CFR / C&F | Goods + freight | 22,400.00 | 1,456.00 |
| CIF | Goods + freight + insurance | 22,580.00 | 1,467.70 |
The spread between the top and bottom rows is 167.70. Nothing about the cargo changed. What changed is that under CIF you are paying duty on the 2,400.00 of freight and the 180.00 of insurance — money that has already left your account, taxed again on the way in.
Why this is not a loophole
It is tempting to read that table as an argument for always buying FOB. It is not, for two reasons.
The first is that the basis is not yours to pick. Many customs authorities assess on a CIF-type value regardless of how the sale was written, precisely because the alternative would be an invitation to move cost into freight. The Incoterm describes who arranges and pays for carriage; whether your authority then adds that carriage back into the dutiable value is a matter of national law, not of what your contract says.
The second is that buying FOB does not make the freight free. It makes it yours — you book it, you pay it, and it lands in your costs rather than your supplier's price. If your authority assesses FOB, the duty saving is real; if it assesses CIF, you have taken on freight management and changed nothing about the bill.
The part worth acting on
What the table does tell you is how much of your duty bill is duty on logistics rather than duty on goods. Here it is 167.70 out of 1,467.70 — 11.4% of the duty, charged on the cost of moving the goods rather than on the goods. That is worth knowing before you agree a freight quote, because on a CIF basis every extra 100.00 of freight carries 6.50 of duty behind it.
It also tells you which question to ask your broker first. Not "what is my duty rate" — that follows from the classification. Ask what basis your authority assesses on, because that decides which of the three rows above is your bill.
What else lands in the customs value
Freight and insurance are the two everybody argues about, and they are not the only additions. Under the transaction-value method most authorities use, several costs that never appear on the commercial invoice are still added before the rate is applied:
Assists. Tooling, moulds, dies, or design work you supplied to the factory free or below cost. If you paid for the injection mould, its value is apportioned into the goods it produced, whether or not anybody invoiced you for it.
Royalties and licence fees you pay as a condition of sale.
Selling commissions — though buying commissions generally are not added, which is a distinction worth getting right with a broker.
Packing costs, including containers and labour.
And some things come out: inland freight after the port of import, duty itself, and charges for construction or maintenance performed after import, provided they are separately identified on the invoice.
Why the separately-identified part matters
That last clause does most of the work in practice. A supplier who quotes one number for everything has handed you a figure that is dutiable in full. The same supplier breaking out goods, international freight, and post-import delivery gives you a documented basis for excluding the parts your authority excludes.
It costs nothing to ask for, and on a 6.5% rate every 1,000.00 correctly excluded is 65.00 of duty that was never due — plus the VAT charged on top of it.
Three questions, in order
What basis does my authority assess on? This decides which row of the table is yours and is a fact about the country, not about your contract.
What is on the invoice, and is it broken out? A single bundled figure forfeits every legitimate exclusion.
Have I supplied the factory with anything? Tooling and artwork are the two that catch importers, because neither feels like part of the shipment and both can be added to it.
The first answer applies to every shipment you will ever make into that country, so get it once, in writing. And when you compare two quotations, put them on the same Incoterm first: a CIF price has freight bundled into a figure you will pay duty on, an FOB price does not, and comparing them as quoted is out by up to 167.70 of duty on a shipment this size.
Work it for your own shipment
The figures above come from the same code the calculators run, so typing these inputs in reproduces them exactly. Your own numbers are the point though — work the dutiable value on each basis, then put it through the duty calculator.
These are estimates, not assessments. Duty rates, the taxable base, and the valuation rules that decide them are set by national law and by how your goods are classified. A customs broker or your national customs authority gives you the binding answer; this site gives you the arithmetic so you know roughly what is coming and which question to ask.