Customs Valuation of Imported Goods for Customs Procedures (Part 1)

In the current manufacturing landscape, importation of goods is often unavoidable, particularly for manufacturers that rely on production inputs sourced abroad. These import activities require customs clearance, which frequently involves potential customs tax challenges—for example, ensuring the imported goods are classified correctly under the tariff code, that the declared customs value is accurate, and that the supporting documents to establish a claim for tax privileges are prepared properly.
This article will discuss the fundamental principles used to determine the customs value of imported goods, which must be assessed in accordance with the legal framework set forth in Section 17 of the Customs Act B.E. 2560 (2017) (“Customs Act”):

Section 17. A determination of a customs value in case of importation shall include a cost of insurance, a cost of transportation, a cost of loading and unloading of goods, and other costs related to a transportation of goods to a customs house. 
In the case where there is no cost of insurance, cost of transportation, cost of loading and unloading of goods or other costs related to the transportation of goods to a customs house as specified in paragraph one, a customs value of such goods shall be in accordance with that prescribed by the Director-General.

According to the legal principles set out in Section 17 of the Customs Act, the customs value of goods is based on the CIF price. In international trade, "CIF" stands for "Cost, Insurance, and Freight," which reflects transactions in which the seller is responsible for all costs incurred to deliver the goods to the buyer's specified destination, including the costs of the goods, insurance, and freight.

In practice, sales of goods may not always proceed on CIF terms; buyers and sellers can choose different incoterms, for example, FOB, Ex works, DDU, or DDP. However, no matter which incoterms the parties agree to use, when goods are imported to Thailand through customs procedures, the importer must calculate the value of the goods based on the CIF price and pay the applicable duties, along with any other applicable taxes. The Customs Act grants the Director-General of the Customs Department the authority to issue announcements specifying the values of insurance, transportation, loading, unloading,  and handling costs related to the transportation of goods to the port or customs airport of import, and the Director-General of the Customs Department has established the following method for determining the CIF value of imported goods:

1. Converting FOB to CIF prices

• 1.1 Where the actual expenses are known, the expenses must be added to the FOB price.
• 1.2. Where actual expenses are not available, the conversion is handled as follows:
  • 1.2.1 If there is no documentation showing the insurance costs, 1% of the FOB price must be added as insurance costs.
  • 1.2.2 If there is no documentation showing the freight costs:
    • (1) For imports by sea or land, 10% of the FOB price must be added as freight cost.
    • (2) For imports by air, the freight cost must be added to the sum of the price and insurance cost of the goods, using the following methods: 
      • (2.1) Use the freight charges stated on the original House Air Waybill (“HAWB” ) from the loading port, provided it has been certified by an approved warehouse operator.
      • (2.2) If the freight charges are not shown on the original HAWB or if there is no HAWB, use the freight charges indicated on the Master Air Waybill (“MAWB”).
      • (2.3) If the freight charges are not shown on either the original HAWB or the MAWB, or if neither document is available, apply the average freight rate according to the Full IATA Rate as specified in the Thai Cargo Tariff book.
      • (2.4) For urgent shipments, whether or not accompanied by passengers, use the average transportation cost rate for each zone approved by the Customs Department (in the relevant notification). 
      • (2.5) For goods imported by air with a price list that shows the total price, including shipping costs, the shipping costs must be deducted, and the actual air freight paid must be added. If the shipping costs to be deducted are unknown, 10% of the price of the goods must be deducted for this purpose. 
      • (This situation may arise when goods are traded on delivery terms by sea and CIF by sea, but where the seller sends the goods to the buyer by air.) A declaration of value for calculating duties must include air freight and insurance, by converting the CIF by sea price to CIF by air. 
        • (2.5.1) If the sea freight cost is known, that amount  can be deducted and replaced with the air freight cost paid by the seller or shipper. 
        • (2.5.2) If the shipping cost to be deducted is not known, the Director-General of the Customs Department has established that the shipping cost shall be calculated at a rate of 10% of the price of the goods. 
    • (3) For imports by post, the postage fee must be added, in an amount based on the  international parcel postage rate of Thailand Post Company Limited applicable at the time of import.

2. Sales on EXW / FAS / FCA delivery terms:
If there is no supporting evidence of payments related to transportation, unloading, or loading costs incurred to move the goods from the place of delivery to the port of export, an additional 3% of the declared price must be added, to convert the price to a FOB price first. The customs value then is be calculated in accordance with the rules for converting FOB to CIF.

3. In other cases, the matter must be submitted to the Director-General of the Customs Department for consideration on a case-by-case basis.
The next installment in this series (Part 2) will review other issues that should be considered when determining the customs value of imported goods.

This article is intended as merely a regulatory overview, and is not intended to be comprehensive or to constitute legal advice. If you have any questions on this or on other areas of tax law, please do not hesitate to contact our Tax Team at SCL Nishimura & Asahi Limited.

Budhima Kerdsiri
Counsel

Hatairat Sukprasert
Associate

We provide the full range of legal services related to Thai and international taxation and customs. Our team consists of highly experienced and capable tax lawyers and consultants with  knowledge and expertise in Thai tax matters. Our services include, but are not limited to, tax advice, tax planning and restructuring, tax compliance, tax audit support, tax health checks, tax due diligence, tax refund requests, tax appeal and litigation as well as customs advice and appeals.

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