Import duties and VAT

Calculating Import Duties & VAT

Did you know that import duties and VAT can make a significant difference to the final price of your imports? The price you see on your supplier invoice is seldom the price you end up paying for the landed goods after you receive your Custom’s bill.

It is essential to know how to calculate import duties and VAT. Knowing the final cost upfront will help you determine whether your imports will be profitable and within your budgeted price range. The good news is that if you are a VAT registered vendor, you may claim back VAT on your imports.

How to calculate import duties

Customs can charge import duties in four ways, namely:

  1. Free (no import duty or tax payable);
  2. Rated or specific;
  3. Ad valorum; or
  4. Compounded (combination of rated and ad valorum)

Table 1 provides an example of how each duty works.

Table 1: Types of import duties and examples
Type of dutyExample
Rated or specific“10 cents per square meter” or “3 cents per dozen”
Ad valorem (fixed percentages of the value)“10% of the value” or “25% of the value”
Compound (combination of rated and ad valorem duties applicable to goods mentioned in the same tariff heading)“20% + 8 cents per kg” or “50 cents per square meter less 20%”

In the Customs Tariff Book (a document listing all traded items and their duties), each item is classified according to a tariff or HS codeEach tariff code is associated with a specific duty tax.

You can access a copy of our Tariff Code Lookup Guide, along with an explanation of how to use it, in our Calculators section.

Note: The rate of duty you are liable to pay may differ depending on the country you are importing the goods from. If you are importing from an EU, EFTA, MERCOSUR or SADC country, different rates apply. Make sure that you look up the correct rate of duty.

Once you’ve looked up the duty tax rate, calculate the total duty tax liable as per the examples below. Add this duty tax to the purchase price of your goods to determine your total landed cost.

Rated or specific calculation:

Volume of goods = 1000m², Duty tax = 30c per M²

Total duty tax = 1000 x 30c = 30 000 cents or R300

Ad Valorem Calculation:

Cost of goods = R1000, Percentage duty tax = 25%

Total duty tax = R1000 x 25/100 = R250

How to calculate VAT

Now that you have your import duty, you can calculate how much VAT you are liable to pay. The VAT must be paid before your goods are cleared at Customs.

Calculate the VAT as follows:

Product price on commercial invoice (e.g. R100)

+ 10% of commercial invoice (e.g. R10)

+ duty tax (e.g. if duty tax percentage is 20% then R20 is added)

= Total (e.g. R130)

15% VAT is levied on the total amount.

You can perform the above calculation automatically on our free VAT and Import Duty Calculator.