CIF vs FOB: Which Value Is Import Duty Charged On?
Two shipments with the same goods and the same duty rate can pay different duty depending on whether the destination counts freight in the customs value. Here is how it works and why it matters for your quotes.
The interactive calculator needs JavaScript. Enter your product price, quantity, freight, insurance, duty rate and destination country, and it shows the landed cost, duty, VAT and selling price.
What CIF and FOB mean
FOB (free on board) and CIF (cost, insurance and freight) are Incoterms for sea freight that say where the seller's responsibility ends. Customs authorities also use the ideas to describe what goes into the customs value.
A CIF-type value includes the goods plus freight and insurance to the border of the importing country. An FOB-type value covers the goods up to the point they leave the exporting country, without the international freight.
Who uses which basis
| United Kingdom | CIF: freight and insurance to the UK border included |
|---|---|
| European Union | CIF: freight and insurance to the EU border included |
| United States | FOB-type: international freight and insurance excluded |
| Canada | FOB-type: transport from the place of direct shipment excluded |
The difference in pounds
Take goods worth £10,000 with £1,500 of freight and insurance and a 10% duty rate. On a CIF basis duty is £1,150. On an FOB basis it is £1,000. On high-freight, low-value goods the gap can be much larger.
What this means for your quotes
- Always know the destination's valuation basis before you estimate duty.
- For UK and EU imports, include freight and insurance in the duty calculation.
- Your Incoterm with the supplier is separate from the customs basis: even if you buy FOB, UK duty is still charged on the CIF value.
- Show the basis on your quote so your customer understands the number.
Note
All figures are estimates, not customs advice. Check the commodity code, origin rules and any reliefs before you rely on a number.
Frequently asked questions
If I buy goods FOB, is UK duty charged on the FOB price?
No. The UK adds freight and insurance to the border, so duty is charged on the CIF value whatever Incoterm you agreed.
Does OCTA Cost handle both bases?
Yes. It uses the CIF basis for UK and EU destinations and an FOB-type basis for the US and Canada when it calculates duty.
Related
- UK import duty calculator
- US import duty calculator
- Canada import duty calculator
- How UK import duty is calculated
Let the calculator pick the right basis
OCTA Cost applies the correct valuation basis for each destination on every quotation line.