Does freight increase import duty? Three countries, nine worked examples

A freight increase can change the tax bill even when the goods price and duty rate stay fixed. The result depends on which costs enter the customs value and which enter the VAT or GST base.

We compared published customs guidance in three jurisdictions, then calculated nine examples using the same goods price and a hypothetical duty rate. These are worked scenarios, not observed shipments or a ranking of countries by tax burden.

Where freight enters the calculation

CBP’s CIF guidance explains the US exclusion. HMRC’s transaction-value guidance includes transport and insurance to the border. ABF’s valuation factsheet distinguishes international costs from costs before the place of export.

For the consumption-tax base, HMRC adds duty and relevant incidental expenses. ABF describes the GST base and the 10% GST rate. Add a cost only once if it is already in the starting value.

The assumptions matter

Every row starts with goods valued at 10,000 currency units. Freight and insurance together are 0, 1,000 or 2,000. We use a hypothetical 5% ad valorem duty in all three jurisdictions, 20% VAT for the Great Britain scenario and 10% GST for the Australian scenario. We hold the product, origin and eligibility assumptions fixed.

These currency units are illustrative, not USD converted into GBP or AUD. A zero-freight row is an arithmetic baseline, not advice that customs will accept a zero transport value. Assume the transport costs have been apportioned to the relevant valuation points and there are no additional domestic costs.

Excluded: thresholds, preferences, extra tariffs, trade remedies, excise, wine tax, brokerage and entry fees, exchange-rate effects, reliefs and tax recovery. The model assumes an ordinary taxable import using an accepted transaction value. The duty rate is not a tariff quote for any product.

Nine worked examples

“Modeled taxes” means duty plus the VAT or GST included here. The US column contains duty only. It is not an all-in landed cost or a measure of permanent business cost after tax credits.

What the extra 2,000 changes

Against the zero-freight baseline, modeled taxes rise by 520 in Great Britain and 200 in Australia. US modeled duty stays at 500. In the Great Britain example, the increase consists of 100 additional duty and 420 additional VAT. In Australia, the increase is 200 GST.

This follows from the model’s formulas, not from a survey: Great Britain’s marginal tax is 5% + (1 + 5%) × 20% = 26%. Australia’s is 10%. Neither figure is a universal effective import tax rate.

Formulas and reproduction

• US: customs value = goods. Duty = customs value × 5%. No consumption tax is modeled.
• Great Britain: customs value = goods + eligible freight and insurance. Duty = customs value × 5%. VAT = (customs value + duty) × 20%, under the stated no-additional-cost assumption.
• Australia: customs value = goods. Duty = customs value × 5%. GST = (customs value + duty + eligible freight and insurance) × 10%.

Our calculations are in the CSV and JSON downloads. The downloadable script reproduces both reports: save it beside the frozen location input and run node reproduce-2026-10.mjs --standalone. In the source checkout, use node scripts/build-research-data.mjs --check. Guidance was checked on 26 October 2026. Great Britain is the geographic scope of the UK example; Northern Ireland is not covered.

For an actual shipment, confirm the classification, origin, valuation adjustments and current charges with the relevant authority or broker. Use the landed cost worksheet to organize inputs after establishing the correct bases. The worksheet is configurable and does not determine a jurisdiction’s tax rules.