Import taxes and fees include import tariffs, import consumption tax (for some commodities) and import value-added tax.
(I) Calculation of tariffs
1. Dutiable price of imported goods
The dutiable price of imported goods is usually based on the CIF price. If there is a commission or discount in the transaction, it should be deducted from the transaction price. If importing on FOB or CFR terms, it is necessary to master the price conversion method between trade terms. The calculation formula is as follows:
When importing on FOB, CIF price = (FOB price + freight) ÷ [1-insurance rate x (1 + insurance premium)]
When importing on CFR, CIF price = CFR price ÷ [1-insurance rate x (1 + insurance premium)]
Tips
Main categories of import tariff calculation methods
Tariffs on imported goods are levied by ad valorem, ad volume or other methods prescribed by the state.
1. Ad valorem: The import tariff rate is generally a proportional rate, and the calculation formula is:
Tax payable = Duty-paid price x tariff rate
2. Quantity-based levy: The import tariff of a few goods such as beer and crude oil is levied on the basis of quantity, and the calculation formula is:
Tax payable = Quantity of goods x Unit tax
About the situation of no insurance policy
When declaring and clearing imported goods, if the insurance premium cannot be determined or is not actually insured (insurance policy cannot be provided), the customs usually calculates the insurance premium according to 3‰ of the total amount of “goods price plus freight”. The calculation formula is: insurance premium = (goods price + freight) x 3‰.
2. Calculation of tariff payable on imported goods
After the duty-paid price is determined, the import tariff can be calculated by querying the applicable tariff rate of the imported goods through the “Import and Export Tariff”. The tariff calculation formula is:
Tax payable = Quantity of taxable imported goods x CIF price x Applicable tariff rate
(II) Calculation of payable consumption tax
Consumption tax paid at the import stage is usually collected by the customs. Importers only need to pay consumption tax when declaring to the customs when importing taxable consumer goods from abroad. If non-taxable consumer goods are imported, no consumption tax is required.
There are three methods for calculating consumption tax, namely, ad valorem, ad volume, and composite taxation.
1. Calculation of consumption tax levied ad valorem
Taxable price = Duty-paid price + Duty + Consumption tax
Duty-paid price is the CIF price; consumption tax is a tax included in the price.
Therefore, the calculation formula for consumption tax levied on the basis of value is:
Taxable price = (duty-paid price + tariff) ÷ (1-consumption tax rate)
Consumption tax payable = taxable price x consumption tax rate
2. Calculation of consumption tax levied on the basis of quantity
Consumption tax levied on the basis of quantity is based on the quantity of taxable consumption tax on imported goods determined by the customs, and the calculation formula is:
Consumption tax payable = quantity of taxable imported goods x applicable fixed tax rate
3. Calculation of consumption tax levied by composite taxation method
Compound taxation refers to the use of both ad valorem and quantity-based taxation. For example, the consumption tax payable on imported cigarettes is calculated as follows:
Taxable price = (duty-paid price + tariff + import quantity x fixed tax rate) ÷ (1-consumption tax rate)
Consumption tax payable = taxable price x consumption tax rate + import quantity x fixed tax rate
(III) Calculation of value-added tax payable
Value-added tax is a tax outside the price. The import value-added tax amount is calculated by multiplying the value-added tax payable by the applicable import value-added tax rate. The calculation formula is as follows:
Taxable price = duty-paid price + tariff + consumption tax
Value-added tax payable = taxable price x value-added tax rate