April 3, 2026

Duties, Taxes & Fees

One of the most common challenges for businesses importing into the Philippines is accurately estimating the total cost of importation. The final landed cost of goods is typically higher than the purchase price alone, as it includes multiple layers of duties, taxes, and service fees.

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Component 1: Cost of Goods (FOB Value)

This is the starting point - the price of the goods as agreed with the supplier, typically on a Free on Board (FOB) basis. It does not yet include freight or insurance.

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Component 2: Freight and Insurance

Freight costs depend on the mode of shipment (sea or air), the volume and weight of goods, and the origin country. Insurance is recommended and is included in the customs value computation.

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FOB + Freight + Insurance = CIF Value (Customs Value Basis). See our Customs Valuation Methods in the Philippines article for how this is applied.

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Component 3: Customs Duty

Import Duty = CIF x Applicable Duty Rate. Duty rates under the AHTN range from 0% to 65% depending on the product classification. Preferential rates may apply if a valid Certificate of Origin is submitted under a Free Trade Agreement.

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Component 4: Value-Added Tax (VAT)

VAT = (CIF + Duty + Other Charges) x 12%. VAT is computed on top of the customs value and duty, meaning it applies to a higher base than many importers expect. This is one of the most common areas where importers underestimate their total cost.

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Component 5: Excise Tax (if applicable)

Certain goods are subject to excise tax in addition to customs duty and VAT. These include alcohol, tobacco, petroleum products, and vehicles. Excise tax rates vary by product category. For the full breakdown of how duties and taxes work, see Import Duties and Taxes in the Philippines Explained.

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Component 6: Port and Handling Charges

These are charges imposed by port operators and are not part of customs taxes, but must be paid before goods are released. They include:

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Accurate cost estimation requires accounting for all of these components together. Importers who only look at the purchase price and duty rate often end up surprised by the actual landed cost. A licensed customs broker can help you compute this accurately before your shipment even leaves the origin country.