Import Costs Broken Down



Basics

It is important to remember that import costs work on a sliding scale and are not strictly percentage based. In other words, no two calculations will be the same even if it is the same product. Any changes in your “input information” [quantities, unit cost, shipping dimensions, shipping weights, collection & delivery address etc] will change the outcome of the per unit value. As a general rule the more units you import at the same time the lower your per unit value will become.

All  import costs are charged in the originating currency or in most cases USD. Although you as a South African client will read costs in ZAR they are in fact converted to ZAR. As such your biggest enemy [or friend in rare cases] is exchange rate. This applies to everything from your duty calculation to freight and cost of goods.

Custom Value

Also know as the value of the goods. This is the advertised / quoted price from the supplier. This is the value that customs will calculate duties and VAT from.The first mistake that most will make here is to do the currency conversion incorrectly [see: Converting Currency].

Always make sure that your supplier separates the freight charges from the value of the goods. This is important as it will affect your import cost calculation. Ideally you would like your supplier to quote you EXW as well as FOB [see: Incoterms Simplified]

Import Duties

As you can imagine it would be impossible to list every single item available on the global market as a single entity, under its own heading. As a result items are more often than not grouped into categories, which can be left for interpretation. There are of course exceptions to the rule, whereby you may find an item has been given a dedicated tariff heading. It is of utmost importance to confirm which heading your items would fall under. If not done correctly, or “guesstimated” you will almost undoubtedly be in for a nasty surprise.

Import VAT

Value added tax is non negotiable on any and all imports. Do not  be fooled into thinking that you are not liable to pay vat on any import. You will not be liable to pay vat, to your supplier [in the exporting country] but you can be sure that before your goods are released from local customs you will be required to pay vat. This will apply whether you are vat registered or not.

Import VAT is calculated as follows:

Custom value + 10% + Duties Value = ATV [Added Tax Value]

ATV x 14% = VAT

The VAT value is calculated according to  the exchange rate, on the day of “shipped on board.”

Freight

There are a number of different ways of getting your imported goods from your supplier to South Africa, each with its own lists of pros and cons but for the purpose of this article we will not delve too deeply into these. What is most important to remember here is that when you are quoted “Freight,” be it from your supplier, a courier company or even some freight forwarders there are “hidden” costs.” The “freight” being quoted is just that – only freight. What 99.9% of suppliers do not tell you [they are under no obligation to do so] is that there are other fees, levies and surcharges involved. These fees may include but are not limited to:

  • Way bill

  • Fuel Surcharge

  • Security Surcharge

  • Hazardous Surcharge

  • Split Fees

  • Less container

  • Hand Over

  • Currency Adjustment

  • Bank Commission

  • Documentation

  • Finance

  • Communication

  • Cargo Dues

  • Unpacking

  • Freight Release

  • Minimum Charge

  • And the list goes on….

Custom Clearance

Every single item imported into South Africa has to be cleared by customs. The cost for this will vary from provider to provider contact MALBE for more.

Letter of authority / Certification

Some items for import need certification and/ or permissions from their respective governing bodies. In some cases there are costs involved. These need to be researched and considered.

Inland Transport

A common mistake is to pay no attention as to how your goods will arrive at your warehouse / property / door. Inland transport costs are by no means included in you freight costs. Furthermore, you must pay attention to your offload facilities as offload / unpack is not included unless otherwise indicated.

Banking

Most importers do not give this part of the import process a moments thought. It is however worth noting, especially  when you have a large amount of money that needs to be converted.

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