Customs Value (CIF vs FOB)
Customs value is the figure your import duty is calculated from, and whether it is assessed on CIF or FOB changes what you pay.
Definition
FOB value is the value of the goods alone, up to the point they are loaded on board. CIF value adds international freight and insurance to that figure.
Most customs authorities assess duty on the CIF value. A minority assess on FOB. The distinction matters because freight can be a significant share of the total for low-value, high-volume goods.
Formula
CIF value = FOB goods value + freight + insurance
Example
Goods worth 10,000 USD with 800 USD freight and 50 USD insurance give a CIF value of 10,850 USD. At a 5% duty rate that is 542.50 USD of duty.
When you will come across it
- Completing a customs entry and checking the duty figure on your broker's invoice
- Budgeting landed cost before you commit to a purchase
- Checking whether a de minimis threshold removes duty entirely
Frequently asked questions
Is duty calculated on CIF or FOB?
Most customs authorities use CIF value. Some use FOB. Check the rule for your destination country before you quote, because the difference is not trivial on high-freight lanes.
Is VAT charged on the freight as well?
In most countries import VAT is assessed on the customs value including freight and insurance, plus the duty amount, which is why freight affects the tax bill too.
What is a de minimis threshold?
A declared value below which no duty is charged. These thresholds vary by country and change frequently, so check the current rule for your destination rather than assuming duty applies.