Duty is a percentage. The number it multiplies is customs value, and most US importers buying from Thailand never audit that figure. Getting valuation right is usually worth more than another round of price negotiation.
The default: transaction value
CBP starts with transaction value — the price actually paid or payable for the goods when sold for export to the United States, under 19 U.S.C. 1401a. For a normal FOB Laem Chabang purchase, that is your invoice price.
But the statute requires you to add certain amounts if they are not already in the invoice:
| Dutiable addition | Typical Thailand example |
|---|---|
| Packing costs | Export cartons and pallets billed separately |
| Selling commissions | Fees paid to a buying-side agent are generally not dutiable; selling agent commissions are |
| Assists | Free tooling, moulds, dies, artwork, or components you supply to the Thai factory |
| Royalties / licence fees | Payments the buyer must make as a condition of sale |
| Proceeds of resale | Any amount that flows back to the seller |
Assists are the line that catches new importers. If you paid a Thai factory USD 18,000 for injection moulds and then buy parts at USD 1.10 each, the mould cost must be apportioned across the units produced and declared. It is not optional, and CBP looks for it during a focused assessment.
What is not dutiable
Deduct or exclude, when separately identified on the commercial invoice:
- International freight and insurance (already excluded on FOB terms; must be broken out on CIF/DDP invoices)
- Post-importation construction, assembly, or technical assistance
- US inland freight after the port of entry
- Import duties and federal taxes
A DDP quote from a Thai supplier bundles freight, duty, and delivery into one number. If your broker enters that whole figure as customs value, you pay duty on freight and duty on duty. Insist that DDP invoices itemise goods value separately.
The First Sale rule
Where a Thai factory sells to a Hong Kong or Singapore trading intermediary who then sells to you, US law can allow duty to be assessed on the first sale — factory-to-middleman — rather than the higher price you pay. It is a legitimate, long-established doctrine (Nissho Iwai), not a loophole.
Three conditions must all hold:
- The first sale is a genuine bona fide sale with title and risk passing.
- The goods are clearly destined for the United States at the time of that first sale.
- The transaction is at arm's length, unaffected by any relationship between the parties.
You must be able to document all three: factory invoice, purchase order, proof of payment, shipping instructions naming a US destination. Without the paper trail, do not attempt it.
Worth doing? On a USD 500,000 annual program with an 8% duty rate and a 12% intermediary markup, First Sale saves roughly USD 4,300 a year. On a 0–3% duty rate it rarely repays the compliance overhead. Model it before restructuring anything.
Related-party transactions
If you own or are commonly controlled with the Thai seller, transaction value still applies — but you must show the relationship did not influence the price. The usual proofs are test values, a transfer-pricing study, or an all-costs-plus-profit build-up. Have this ready before the first entry, not after a CBP Form 28.
Practical checklist
- Break out goods, freight, insurance, and tooling on every commercial invoice
- Declare tooling and free-issue material as assists, apportioned
- Keep signed POs, invoices, and bank remittances for five years from entry
- Reconcile invoice value to actual payments; use post-summary correction or reconciliation if they diverge
- Tell your broker about every royalty, rebate, and commission arrangement
Valuation errors compound quietly across years of entries, and CBP can look back five years with penalties under 19 U.S.C. 1592. Fixing the invoice format takes one email to your Thai supplier.
Pair this with our US landed cost formula, HS code guide, and customs and CBP guide.
FAQ
Is customs value the same as the price on my invoice?
Usually it is the starting point, but not always the final figure. You must add dutiable elements such as assists, packing, selling commissions, royalties that are a condition of sale, and any proceeds of resale that flow back to the Thai seller. You may exclude international freight, insurance, and post-importation costs when they are separately identified on the invoice.
Do I have to declare moulds I paid for in Thailand?
Yes. Tooling, moulds, dies, engineering, and free-issue components supplied to the factory are assists. Their value is apportioned across the units produced with that tooling and added to customs value. Declaring nothing is a common and expensive mistake found during CBP focused assessments.
Does the First Sale rule apply if I buy directly from a Thai factory?
No. First Sale requires at least two sales in the chain — factory to intermediary, intermediary to you. If you buy direct, there is only one sale and its price is the customs value. Direct purchasing already gives you the lower value, so nothing is lost.
What documents does CBP expect me to keep, and for how long?
Purchase orders, commercial invoices, packing lists, proof of payment, contracts, tooling agreements, certificates of origin, and entry summaries — for five years from the date of entry. Electronic copies are acceptable if they are complete and retrievable.
How do I handle a DDP quote from a Thai supplier?
Ask for a breakdown that separates goods value from freight, insurance, duty, and delivery. Enter only the goods value as customs value. If the supplier refuses to itemise, CBP will generally treat the full DDP figure as dutiable, and you will overpay duty, MPF, and HMF on transport costs.
Can I correct a valuation mistake after entry?
Yes, and you should. Use a post-summary correction before liquidation, or a prior disclosure under 19 U.S.C. 1592(c)(4) for older entries. Voluntary disclosure caps the penalty at interest on the unpaid duty in most cases; waiting for CBP to find it does not.