Philippine import duty and clearance: basics and common myths

Cost components

1. Import duty: on HS code and CIF value; rates vary widely by category;
2. VAT: applied on the duty-paid value plus duty and other charges;
3. Other taxes: excise or specific taxes for some categories;
4. Brokerage and documentation;
5. Port and demurrage charges when documents are incomplete or goods are examined;
6. Inland transport.

Common myths

• Looking only at the duty rate: VAT base includes duty;
• Casual HS classification: misclassification brings assessments, penalties or holds;
• Underestimating examination: first imports, sensitive categories or unusual declared values raise inspection rates;
• Incomplete documents: inconsistent invoice, packing list, bill of lading and certificate of origin is the top cause of demurrage.

Recommendation

Model landed cost at quotation stage — duty, VAT, clearance and inland transport — then derive a workable selling price. Port differences (Manila, Cebu, Davao) in cost and speed belong in the model too.