Freight Shipping between Thailand and Pakistan | Rates – Transit times – Duties and Taxes

How to calculate duties & taxes when importing from Thailand to Pakistan?

Calculating customs duties on imported goods from one country to another involves several key factors: the goods' country of origin, the HS (Harmonized System) code that corresponds to the type of product, the customs value, the tariff rate applicable in the destination country, and other potential taxes, duties, and administrative charges. It's like a puzzle where every piece contributes to the final picture of your import costs. Now let's shift our focus to the initial and crucial step of the process - identifying the country where your goods have been manufactured or produced, as it lays the foundation for all ensuing calculations.

Step 1 - Identify the Country of Origin

Determining the true country of origin isn't just another box to tick on your shipping checklist. Here's why:

1. Calculating Duties: The country of origin serves as a compass that directs the calculation of duties and taxes by establishing the product's Harmonized System (HS) code.

2. Trade Agreements: Thailand and Pakistan have bilateral trade agreements, such as the Thailand-Pakistan Closer Economic Partnership Agreement, which can afford importers reduced - or waved - duties, based on the product's country of origin.

3. Regulatory Compliance: As an importer, you must comply with both countries' trade regulations. Identifying your product's origin will help you know where you stand legally.

4. Import Restrictions: Certain goods may face import limitations from Thailand to Pakistan. For example, certain chemicals, metals, and agricultural products may have restrictions or be banned entirely.

5. Transparency: Finally, transparency in trade helps build trust with your customers, the public, and customs authorities — and it starts with clearly identifying the product's country of origin.

So, before you delve into that tricky HS code, be aware of the benefits of correctly identifying your product's country of origin. It's not a hassle, it's the ultimate guide!

Step 2 - Find the HS Code of your product

The Harmonized System (HS) Code is a globally accepted coding system designed to classify traded products. As the key to international trade operations, these codes help in identifying the nature, quantity and value of goods shipped or received. Importantly, HS codes play a major role in calculating duties and taxes, executing customs procedures, and maintaining trade policies and statistics.

If you're unsure of your product's HS code, it's often most straightforward to consult with your supplier first. Suppliers regularly handle import issues and are acquainted with the required regulations and HS codes relating to their products.

Should you not be able to obtain the needed information from your supplier, our guide provides a simple sequence of steps you can follow. By using the online Harmonized Tariff Schedule tool, you can identify your product's specific HS code.

1. Click on the link to access the Harmonized Tariff Schedule.
2. Enter the name of your product into the search bar.
3. You will find the HS code by checking the Heading/Subheading column.

It's essential to emphasize the importance of ensuring the accuracy of the chosen HS code. Any inaccuracies can lead to undesirable circumstances, such as shipment delays or even fines. Inaccurate coding can potentially result in incorrect duty and tax payments, stalling or misrouting of shipments, or legal penalties.

Here's an infographic showing you how to read an HS code.

Step 3 - Calculate the Customs Value

Cracking the code on customs value, are you? Well, it's not as complex as you might think. Essentially, 'customs value' differs from the simple value of your goods - it's the sum of the product's price, cost of international shipping, and insurance cost. This is often referred to as CIF value. So, if you're shipping an item valued at $5,000 from Thailand to Pakistan and your international shipping cost is $1,000, while insurance runs at $500, your customs value isn't $5,000, but a grand total of $6,500. Now, keep in mind that customs authorities use this CIF figure, not just the product's price, to calculate duties so it's an essential detail in your overall shipping plan.

Step 4 - Figure out the applicable Import Tariff

Import tariffs are essentially taxes paid on goods shipped internationally, levied by the country importing those goods. In Pakistan, the type of import tariff used is Ad Valorem, which is a percentage of the product's declared value.

To find out the applicable import tariff rate is rather straightforward:

1. First, visit the Federal Board of Revenue’s official website for Pakistan.
2. Using the HS product code identified earlier (let's say 6103.43 - Men's or boys' suits of synthetic fibres), find the corresponding tariff rate.

For our example, we'll assume an import tariff of 20%.

Now, take into account your CIF (Cost, Insurance, and Freight) value; let’s assume it’s USD 10,000 for our example. The import duties are calculated as a percentage of this total. So, an import tariff of 20% on a CIF of USD 10,000 gives us import duties of USD 2,000.

With these figures, you're equipped to handle the financial aspects of your shipment's journey more effectively, mitigating unexpected costs and making the best decisions for your business's bottom line.

Step 5 - Consider other Import Duties and Taxes

Understanding all the fees involved in customs clearance can be challenging. Apart from the conventional tariff rate, there are often additional import duties depending on the country of origin and type of product.

For instance, an Excise duty might apply - this is an indirect tax charged on certain goods like fuel, alcohol, or tobacco. You might also face anti-dumping taxes - these are duties imposed if a country believes the goods are priced unfairly low.

However, the most common extra fee is the Value-Added Tax (VAT). In Pakistan, the standard VAT rate is 17%. It's crucial to remember that VAT is calculated from the value of the goods plus all the aforementioned duties.

Imagine you're importing wood flooring from Thailand that has a total cost (including shipping and insurance) of $1000. Suppose your tariff rate is 20%, your excise duty - 5%, and an anti-dumping tax - 10%.

First, you'll calculate the sum of these duties ($1000 35% = $350). Then, apply the VAT to the total sum of cost and duties ($1350 17% = $229.5). In this scenario, be ready to shell out an extra $579.50 on top of your initial expenses.

Remember that these values are just theoretical examples and may differ in real situations, but it gives a fair idea of the additional costs you might incur.

Please note, it's integral to double-check these details and consult with a customs broker for precise calculations to avoid any unexpected surprises.

Step 6 - Calculate the Customs Duties

Navigating customs duties in Pakistan for goods imported from Thailand can be a complex process, but understanding how to calculate these duties can empower you to manage your costs more effectively.

The formula for customs duty calculation is: Customs Duty = Customs Value x Duty Rate. The customs value is the total cost of the goods, and the duty rate is a percentage applied by the Pakistan Customs Department on imports from Thailand. Keep this formula in mind while exploring the three scenarios below:

1) For a shipment with a customs value of $10,000 with a duty rate of 20% but no VAT, you'd pay $2000 ($10,000 x 20%) in customs duties.

2) If you had VAT (say 17%), and anti-dumping taxes weren't applicable, the total charges would accumulate to $2340 ($2000 customs duty + $340 VAT).

3) Now, consider a situation where you'd incur customs duties, VAT, anti-dumping taxes (say 10%), and Excise Duty (15%). Applying these to the $10,000 customs value would result in $2840 in total charges ($2000 customs, $340 VAT, $350 anti-dumping, and $150 excise duty).

Navigating customs duties can be daunting, but DocShipper is here to streamline the process for you. We'll handle every step of the customs clearance anywhere in the world, ensuring you aren't overcharged. Reach out to us for a free quote within 24 hours.

Bill of Lading

An unsung hero of Thailand-Pakistan logistics, the Bill of Lading (BOL) is a vital document that sets your shipment sailing (or flying!). It's a legally binding contract that transfers ownership of goods, confirming the carrier has received your goods. Picture it as the shipment's ticket to its destination in Pakistan. But what if you could streamline this process? That's where electronic ('telex') releases come in, making paper BOLs a thing of the past. Swift, secure, and without the risks of physical documents, telex releases expedite shipments nearing Pakistan's ports. For the sky-high deliveries, however, it's the Air Waybill (AWB) performing similar duties. Important takeaway? Ensure your BOL or AWB is always accurate and properly filed – it's your cargo's passport between these countries!

Packing List

Don't underestimate the power of the Packing List - it's a vital document when shipping goods between Thailand and Pakistan. As a shipper, it's on your shoulders to generate this detailed breakdown of each item in your shipment, whether you're using sea or air freight. Not only is this list a requirement for customs clearance, but its precision also safeguards you against potential legal issues. Think of it this way: while shipping electronics from Bangkok to Karachi, you can't just jot down 'electronics'. You'll need to describe each item, detailing their quantity and specifications. That's why an accurate Packing List is non-negotiable - it helps smoothen your customs clearance, ensuring that your goods reach their destination without hitches.

Commercial Invoice

Navigating the sea of international shipping documents can be daunting. Take the Commercial Invoice - it's your roadmap from Thailand to Pakistan, essential for a smooth customs clearance. This document should include detailed information such as the buyer and seller, product description, quantity, price, terms of delivery, and shipping method. An overlooked detail can delay freight, leading to unwanted costs. Make sure it aligns perfectly with your Packing List and Bill of Lading to avoid discrepancies. Remember, the accuracy of this document can mean the difference between a package caught in customs limbo and a timely delivery. A well-prepared Commercial Invoice is your valuable ally in turning these global shipping challenges into seamless transactions.