In international trade, the actual profitability of an import is not determined when the goods are purchased at source, but rather when the costs are settled at customs. For an SME in Chile, understanding the tax breakdown of the CIF value and coordinating the documentation required by the National Customs Service is the only way to avoid port detention charges, additional storage costs and disruptions to operational cash flow.
The starting point: How is the CIF customs value calculated?
To determine the financial viability of an import into Chile, the company must accurately calculate the customs taxable value. National regulations stipulate that duties are calculated on the basis of the CIF (Cost, Insurance and Freight) value, comprising:
- FOB (Free on Board) value: The actual cost of acquiring the goods delivered to the port of shipment.
- International freight: Sea freight rate (LCL consolidated shipments or FCL full container loads) or air freight to the Chilean terminal.
- Transport insurance premium: Cover for the cargo during transit. If no individual insurance policy has been taken out, Customs applies a notional insurance premium of 2 per cent of the FOB value, thereby unnecessarily increasing the taxable value.
Customs duties and tax settlement in Chile
The general tax regime administered by the National Customs Service applies a 6 per cent ad valorem duty on the consolidated CIF value. This duty may be waived or substantially reduced if the country of origin of the goods has a Free Trade Agreement (FTA) in force with Chile and a certified certificate of origin is presented.
Subsequently, on the total sum of the CIF value plus the customs duty paid, the Internal Revenue Service (SII) applies Value Added Tax (VAT) at a rate of 19 per cent. This tax constitutes a recoverable tax credit for the importing company, but requires immediate liquidity at the time of customs clearance.
Goods requiring special treatment and prior authorisation
Beyond the tax burden, it is vital to understand that there are many goods subject to special treatment which require specific certificates of origin, approvals and permits from Chilean regulatory bodies before their importation can be processed. Failure to carry out a thorough assessment of these requirements can lead to goods being held up at port and massive financial losses.
Key examples of this include the import of machinery fitted with tyres or the import of batteries (subject to environmental regulations), diesel machinery and vehicles (which require emissions certifications), dairy products (subject to sanitary and animal health controls), and any goods imported in wooden packaging or on pallets, which require rigorous international phytosanitary certificates.
Mandatory document management and the role of the customs agent
In accordance with the Chilean Customs Ordinance, any import with a value exceeding US$3,000 FOB must be handled by an authorised customs agent. To avoid off-port charges and additional costs arising from container demurrage, SMEs must ensure they have the following in good time:
- Original commercial invoice for international sales.
- Marine bill of lading (BL) or air waybill (AWB).
- Packing list specifying the number of packages, weights and volume.
- Certificate of origin and authorisations from technical bodies (such as ISP, SAG or SEC), depending on the tariff classification of the cargo and any special treatment required.
Optimising the supply chain with PAL Logistics
Advance coordination between the supplier at the point of origin, the freight consolidator and the port terminal prevents discrepancies in the documentation for the Import Declaration (DIN). Working with a neutral logistics operator specialising in LCL consolidation and FCL container services enables SMEs to standardise operational traceability, mitigate risks at the port and safeguard their profit margins.
Are you planning your next international shipment? Contact the specialists at PAL Logistics to organise your routes and optimise your import costs.
Fuentes consultadas:
- Chilean National Customs Service: Guide to Imports and Customs Regulations
- Internal Revenue Service (SII): VAT Treatment in Foreign Trade
- ProChile: Foreign Trade Tools and Network of Trade Agreements
