Import duty vs GST vs anti-dumping duty

Three charges with three purposes

An import entry can show customs duty, import VAT or GST, and an anti-dumping or countervailing duty on the same shipment. They arrive together, which is why buyers often treat them as one number. They are separate charges with separate legal bases and separate cash flow treatment.

Customs duty protects domestic production and raises revenue. VAT or GST taxes consumption and is designed to be neutral for a registered business. Anti-dumping duty offsets a finding that imported goods are being sold below normal value and causing injury to domestic industry. A quote that bundles all three into a single percentage hides which part is recoverable and which part is a permanent cost.

The order of calculation also matters. Duty usually feeds into the VAT base, so a small change in classification can move both lines. Anti-dumping duty may or may not enter the VAT base depending on the market. That is a question for the broker, not a guess.

Customs duty

Customs duty is set by the destination tariff. The rate depends on the tariff classification, the origin of the goods and any measures in force. Most engineered parts are charged at an ad valorem rate, a percentage of the customs value. Some lines use a specific rate per kilogram or unit, and some use a compound rate with both elements.

The customs value is not always the invoice price. Many markets build it from the goods value plus freight and insurance to the border, and may add assists such as tooling or design work supplied free of charge. The valuation rules are their own body of law. A supplier that quotes FOB and a buyer that declares FOB in a market that values on CIF will create a correction.

Because duty is a permanent cost, it belongs in the landed cost model as a line, not as a percentage added at the end. It also depends on the origin claim. A preferential rate may apply if the goods meet the rules of origin, and that claim needs evidence.

Import VAT or GST

VAT or GST is a tax on consumption. At import, the customs authority or the tax authority charges it on a base that usually includes the goods value, freight, insurance and duty. The importer pays it at the border or on a deferred return, then recovers it through its normal tax return if it is registered and entitled to recover.

For a registered business, import VAT is a cash flow item, not a cost. That distinction changes supplier comparisons. A DDP price that includes unrecoverable import VAT is more expensive than an FOB price where the buyer recovers the VAT, even if the headline numbers look close. A DDP price that excludes VAT leaves the buyer to pay it on import.

Recovery is not automatic. Some goods are blocked from input recovery, some businesses are partially exempt, and a business that is not registered in the destination market cannot recover at all. Check the position before you build the model.

Anti-dumping and countervailing duty

Anti-dumping duty is a trade remedy. An investigating authority examines whether goods are being dumped, meaning exported at a price below normal value in the exporter's home market, and whether that causes or threatens injury to domestic producers. If both are found, it imposes a duty.

The duty is not a general tariff line. It applies to a defined product scope, from named exporters or producer countries, and it can be calculated per exporter rather than as one flat rate. It may start as a provisional measure and become definitive after the investigation. In some cases it can be collected retroactively.

Countervailing duty is the parallel remedy for foreign subsidies. Both can apply to the same goods, and both are separate from the normal customs duty. A supplier that quotes a price without mentioning an anti-dumping measure may be unaware of it, or may be assuming it will not be caught. Check the destination authority's published measures for the product and origin before you commit.

How the charges stack

The three charges apply in sequence. Duty is calculated on the customs value. Import VAT is calculated on a base that normally includes the duty. Anti-dumping duty, where it applies, is added in the order the local law prescribes, and the VAT base may include it or not.

For illustration only, assume a customs value of 20,000, an assumed duty rate of 6 percent, an assumed import VAT rate of 20 percent and an assumed anti-dumping duty of 11 percent. Duty would be 1,200, anti-dumping duty 2,200, and VAT at 20 percent on a base of 23,400 would be 4,680. The cash payable at import is 28,080, of which 4,680 may be recoverable. These figures are illustrative assumptions, not rates for any product or country.

The example shows why the recoverable line matters. The real cost in the illustration is the duty plus the anti-dumping duty, while the VAT is a temporary outflow. A buyer that compares only the total cash figure will overstate the cost of every import and may choose the wrong supplier.

Cash flow and deferment

A profitable import can still strain cash if the VAT float is large. The tax is paid at import or on the deferred period, and the recovery arrives with the next return. For a business importing every month, the float is a permanent working capital requirement.

Several tools reduce the float. Duty deferment accounts let an importer pay charges on a monthly cycle rather than per shipment. Customs bonded warehousing postpones duty and tax until the goods leave the warehouse. Duty drawback can recover duty on goods that are later exported, subject to the local scheme. Each has conditions and record keeping requirements.

The choice affects the landed cost model. A deferred payment has a financing cost or a benefit depending on the timing. A bonded warehouse changes when the duty is incurred. Model the cash timing, not just the total.

Currency adds another layer. Duty and tax are usually payable in the destination currency, while the goods are often invoiced in another. A movement between the order date and the entry date changes the local cost even when the foreign price is fixed. Note the exchange rate and the date used in the model, and treat the duty estimate as a range rather than a single number.

What to check in a supplier quote

Ask which charges the price includes and which it excludes. A DDP quote should state whether duty, import VAT, anti-dumping duty and clearance are inside the number. An FOB quote should be paired with a separate estimate for each charge.

Then check the classification and the origin claim. The duty line is only as good as the code and the origin evidence behind it. If the supplier cannot explain the code, treat the duty estimate as provisional.

It also helps to ask for the entry documents after the first shipment. The entry shows the code, the customs value, the duty and the tax that were actually applied. Compare that with the model and correct the assumptions before the next order. A model that is never checked against a real entry is only a guess with formatting.

• Which Incoterm, and which charges are inside the price
• The tariff code and the origin claimed
• Whether anti-dumping or countervailing measures apply
• Whether import VAT is included, excluded or recoverable
• The customs value basis used by the destination
• Who is the importer of record and who bears a correction
• Payment timing for duty and tax