Calculating Customs Duty and Taxes

It is very easy to calculate Customs duty and taxs once you know the rulings behind it. If you group items together based on what they are going to be used for, for instance, if you import building materials, you’ll only pay a certain percentage on building materials however, this is not ruling. To process your Customs entry, the Customs Officer or Customs broker will require:

  • Your invoice/receipt showing your transaction of your purchased goods,
  • Your shipping cost, also known as your freight and
  • Any other cost, such as insurance, that was involved in the purchase of your goods.
  • Plus, the use of the tariff book which the Officer or broker will have on hand.

You present the documents to the Customs officer, or your Customs broker, who will then combine all these values provided to get your CIF; that’s your cost, insurance and freight. Alongside the tariff, which the Officer or Customs broker will use, they will proceed to use the correct chapter for your goods. The tariff books spells out everything that is under the sun, whether it is old or new. It starts from the living, to raw materials and then unto finished products. These are the utensils they will use this to calculate your Customs entry using the ASYCUDA system. Therefore, for example, let’s calculate together the duty of scissors.

Let’s say you import scissors. The scissors cost $5 (EC) and to ship here to Montserrat, it’s only $2 (EC); no insurance was involved, hence the total cost of your item is $7 (EC); your CIF. The tariff is used to get the rate of duty and consumption tax on scissors and once it’s found under chapter 82, the percentages will be applied. They will find that the rate of duty is 15% and the consumption tax is also 15% however, it will be the rate of duty that is calculated first. That means it will be 15% of $7 which equals to $1.05. This $1.05 is then added back to the original figure of $7 and following this, the consumption tax of 15% will now be worked out on this new value, $8.05, which when worked out comes to $1.20. When you combine the two costs, the duty and the consumption tax, that’s $1.05 and $1.20, the declaration payable for the scissors will be $2.25.

The ASYCUDA system allows you to see this process broken down, you get to see the cost of goods, the total CIF, your cost insurance and freight, the chapter it falls under, and the percentage rates involved at the bottom left of your Customs entry. If there are more than one products you are clearing, you can see the full breakdown and calculations involved on your copy of the Customs entry. So remember what you need to provide to get accurate duty calculations: your invoice/receipt of transaction, your freight/shipping documentation and other costs involved; any insurance.