How to Calculate Import Duties and Taxes in the Philippines: A Landed-Cost Guide

To calculate import duties and taxes in the Philippines, first establish the goods' customs value in pesos and the applicable tariff rate. Calculate customs duty, check any excise tax or special duties, and then calculate import VAT on the correct tax base. Add the remaining shipment expenses to build your full landed-cost budget.

For ordinary taxable goods subject to an ad valorem duty, the core calculations are customs value × duty rate, followed by 12% VAT on the customs value plus duty, applicable excise tax, and other includible charges. A 12% charge applied only to the supplier's invoice is not a complete import-tax calculation.

This guide focuses on budgeting ordinary commercial imports. Exemptions, incentives, specific duties based on quantity, and special product taxes need separate assessment. The worked example uses fictional amounts and an assumed duty rate to demonstrate the method.

Import duty, import VAT, and landed cost: the differences

Keep three figures separate when you review a quotation or a customs assessment:

Some customs computation sheets call the import-VAT base “total landed cost.” That is not necessarily your complete delivered cash budget. Read the items included in each subtotal before adding anything to it.

The BOC express-shipment estimator illustrates this terminology and the duty/VAT calculation sequence. Its scope and assumptions are specific to eligible express shipments; they should not be copied into every commercial import budget.

Step 1: identify the correct HS code and duty rate

Prepare a precise description of each product, including its material, function, specifications, and condition where relevant. Use the Philippine Tariff Finder to research the AHTN classification, tariff schedule, applicable year, and any rules of origin. The supplier's overseas tariff code is a starting point to check, not a substitute for Philippine classification.

Record the code and rate for each line item. Mixed shipments may contain goods with different duty rates. Ask your customs broker to confirm classification before you commit to a selling price or purchase volume.

Can a free trade agreement reduce the duty?

A preferential tariff depends on the applicable agreement and origin requirements. A shipment leaving China, Korea, or another trading partner does not automatically qualify for its preferential rate. Check the relevant product-specific rule and the required proof of origin, including any permitted origin declaration, before using a reduced rate in your estimate.

Keep an alternative budget using the applicable non-preferential rate until eligibility is resolved. If classification is uncertain, ask about an advance ruling through the Tariff Commission's classification service.

Step 2: establish customs value in Philippine pesos

For a straightforward transaction with no further adjustments, a planning calculation may start with the goods' FOB/FCA value plus international freight and insurance. Customs valuation can also require other additions or adjustments. The BOC importation guidelines explain transaction-value assessment and the need to disclose relevant valuation components, including assists and royalties where applicable.

Confirm what the supplier's price already includes. If the invoice price already includes freight and insurance, do not add the same amounts again. Match the sales contract, invoice, freight invoice, and insurance evidence so each cost is accounted for once.

Use the applicable BOC exchange rate for the declaration. BOC publishes exchange-rate circulars in its Customs Memorandum Circular register. Record the rate and its effective period with your estimate.

Your actual payment conversion may differ from the customs conversion. Track bank conversion costs and actual supplier payments separately when reconciling the cash budget; do not silently replace the customs rate with a card or online currency rate.

Step 3: calculate customs duty and check other product taxes

For goods subject to an ad valorem duty, the customs duty is calculated by multiplying the customs value in Philippine pesos (PHP) by the applicable duty rate. For shipments involving multiple tariff classifications, the duty shall be calculated separately for each tariff line using its corresponding allocated customs value and applicable duty rate, and the resulting amounts shall then be total.

Ask your broker how shared freight, insurance, and any adjustments are allocated across the goods. A single blended rate can hide a classification error. Keep the allocation method and supporting documents with the calculation.

Also check whether excise tax or trade-remedy duties apply. The Tariff Commission publishes information on applied trade-remedy measures, and BOC's importation guidance identifies excise tax and other applicable charges. The ordinary duty formula alone does not cover every product.

Step 4: calculate import VAT on the correct base

For an ordinary taxable import covered by this guide:

• Import VAT Base = Total Landed Cost + Excise Tax (if applicable)

• Import VAT = import-VAT base × 12%.

Section 107 of the Tax Code, as amended by Republic Act No. 10963, sets out the import-VAT rate and base. It also contains a separate provision for goods whose customs duty is determined by quantity or volume.

Have your broker identify the other charges included in the assessment. Do not assume that all local costs are excluded VAT base, or put every warehouse and delivery expense into the tax base without checking. A charge's inclusion in the VAT base does not mean it is itself a tax payable to the government.

Worked example: Philippine import duty and VAT computation

This is an illustrative calculation, not an Upturn shipment, quotation, or official assessment. The 5% duty rate, exchange rate, and fee amounts are assumptions; no product classification is being assigned that rate.

Assume 100 identical units are imported under an ordinary taxable entry, with no excise tax, trade-remedy duty, exemption, or additional valuation adjustment. The invoice is FOB and excludes the separately listed freight and insurance. For simplicity, actual foreign-currency payments and customs conversion both use the same assumed exchange rate.

The PHP 4,000 represents assumed, documented charges that are fully includible in the import-VAT base for this example. It is not a standard brokerage fee or government fee schedule. The PHP 6,000 is assumed to be outside that base. These are the only additional costs in the example, and their cash amounts include any applicable service taxes; a real assessment must establish the correct treatment.

Calculate the duty and import VAT

In this table, Total Landed Cost is the subtotal of customs value, customs duty, and includible miscellaneous expenses / taxable charges before excise tax and import VAT. Add excise tax, if applicable, to obtain the import-VAT base, then multiply by 12% to calculate total import VAT (T.VAT). This subtotal is different from the full landed cash budget below.

The PHP 22,360.32 is the combined duty and import VAT in this scenario. It excludes the separate PHP 4,000 charge allowance and is not a statement of all amounts payable to BOC or service providers.

Build the full landed cash budget

For 100 identical units, that is approximately PHP 1,566.80 per unit. It includes import VAT as a cash payment and is not automatically the accounting inventory cost or the selling price. Have your accountant determine the treatment of any creditable input tax and other expenses.

The PHP 4,000 appears in the tax-base calculation and is paid once in the cash budget. Never add the entire VAT-base subtotal on top of the goods, duty, and charges already listed; that would duplicate costs.

What if the applicable duty rate were 0%?

Keeping every other example assumption unchanged, duty would be zero, the VAT base would be PHP 128,320, and import VAT would be PHP 15,398.40. The cash budget would become PHP 149,718.40. This hypothetical comparison shows why zero customs duty does not, by itself, mean zero import VAT.

What about the PHP 10,000 de minimis threshold?

The BOC importation guidelines state the general de minimis threshold as an FOB or FCA value of PHP 10,000 or below. That threshold test is different from the customs-value calculation used for a taxable shipment.

Do not treat PHP 10,000 as a deduction from the value of a shipment above the threshold. Check the applicable treatment and any product-specific exceptions, especially for excisable goods.

Duty-and-tax relief also does not mean every processing or service charge disappears. CAO No. 02-2025 provides import-processing-charge rules, including rules for de minimis goods. Ask the carrier or broker to identify each charge and its basis. Regulatory permits may still be required.

Can I use the BOC tax estimator for this shipment?

Read the official BOC estimator's disclaimer before using it. At the source-review date, it applies strictly to informal-entry express shipments with FOB/FCA value above PHP 10,000 and below PHP 50,000. Its output is an estimate, with final duties and taxes determined by Customs.

The worked commercial example above is outside that stated value range. Use it to understand the calculation sequence, then obtain a shipment-specific computation. Do not apply the express estimator's default insurance or brokerage assumptions as universal rates for sea freight or larger entries.

Add the costs that a tax calculation does not finish

For a useful landed-cost calculation in the Philippines, collect the complete logistics scope as well as the tax estimate. Check which amounts are already paid by the supplier, included in the freight quote, or incorporated into the calculation above.

Use our LCL vs FCL full-cost comparison when comparing sea-freight options. For arrival planning, see our port congestion and customs clearance guide. A lower freight quote may change both the transport budget and the valuation inputs, so update the full calculation before choosing.

Documents to prepare for a reliable estimate

• Product descriptions, specifications, quantities, and proposed tariff classifications.

• Supplier invoice or pro forma invoice showing currency, price, and agreed delivery terms.

• Freight and insurance quotations, with a clear breakdown of included charges.

• Country-of-origin details and any proposed preferential-origin evidence.

• Details of related-party transactions, assists, royalties, or other possible valuation adjustments.

• Itemized local-service quotations, final delivery address, and expected shipment date.

Ask for an estimate that records its exchange rate, tariff basis, inclusions, exclusions, and unresolved assumptions. Keep a version before booking and reconcile it against the actual assessment and invoices after release. Our invoice review worksheet can help you track document discrepancies.

Frequently asked questions

Is Philippine import tax just 12% of the invoice price?

No. Import VAT and customs duty are different charges, and the VAT base can include more than the invoice price. Check the product's duty rate and the complete assessment before budgeting.

Does an “all-in” shipping quote include all duties and taxes?

Only rely on the written scope. Ask which taxes and services are included, which figures are estimates, and who pays any assessment difference. Request the supporting assessment and payment records for your shipment.

Why can the final customs assessment differ from my estimate?

Check whether the classification, origin eligibility, valuation, exchange rate, or assessed charges changed. Compare the final document with your assumptions line by line and ask your broker to explain discrepancies.

Should I divide the total budget equally across every product?

Equal allocation can work for identical units in a simple example. For mixed products, use an allocation that reflects the relevant costs and confirm the accounting method with your accountant. Otherwise, a bulky or high-duty item may be priced too low.

Plan your import budget with Upturn

Share your product list, supplier invoice, origin, freight terms, and delivery address when requesting a customs brokerage and clearance assessment. Include any available permits and preferential-origin documents so the team can identify what still needs review.

For the wider shipment process, read our beginner's guide to importing into the Philippines, or request a free import duties and taxes estimate with your cargo details and target arrival date.

Sources and review date

Last source review: September 22, 2026. This guide links to BOC guidance and issuances, the Tariff Commission, and the statutory import-VAT provision. Confirm current classification, origin eligibility, exchange rates, taxes, and fees for your shipment before filing. Worked-example values are fictional and do not replace a customs assessment or shipment-specific professional advice.