Freight Shipping between Malaysia and Bangladesh | Rates – Transit times – Duties and Taxes

How to calculate duties & taxes when importing from Malaysia to Bangladesh?

Navigating the red tape of customs duties may seem complicated, but with the right ingredients, it's a piece of cake! The process of estimating duties and taxes when importing from Malaysia to Bangladesh requires some essential information, including:

1. Country of Origin: This is basically the country where your goods were manufactured or produced.
2. HS Code: This is the Harmonized System code, a universally recognized system of names and numbers to classify traded products.
3. Customs Value: The value of the goods, according to Malaysian customs.
4. Applicable Tariff Rate: The rate at which the goods will be taxed upon entering Bangladesh.
5. Other Taxes and Fees: Additional charges that may apply to your products.

The first brick in this fiscal wall is identifying the country where the goods originated – were they crafted in the sprawling factories of Kuala Lumpur or handwoven in the textile mills of Penang? Your journey starts here!

Step 1 - Identify the Country of Origin

Recognizing your product's Country of Origin, in this case, Malaysia, may seem like a no-brainer, but it lays the foundation for your import process.

Firstly, it helps figure out if your product falls under any trade agreements between Malaysia and Bangladesh, potentially enabling hefty customs duty savings. These two nations, for instance, participate in the Developing-8, which could slash your duties significantly.

Secondly, it allows you to navigate through import restrictions, which vary based on the origin. Bangladeshi authorities may impose certain limitations on Malaysian goods, and being aware of these enables smoother customs clearance.

Thirdly, it's a key detail in determining your HS code, a universal system that categorizes goods. This code helps to compute the exact duty you will cough up.

The fourth reason is it helps predict possible hiccups during the clearance process. Some goods from certain countries are subject to strict scrutiny which can delay delivery.

Lastly, understanding the origin helps you forecast cost, tax, and delivery time, aiding in smarter business decisions.

Keep this in mind when assessing the country of origin for your next shipment!

Step 2 - Find the HS Code of your product

The Harmonized System (HS) Code is a standardized system of names and numbers to classify traded products. These codes are used by customs authorities around the world to identify products for the application of duties and taxes. They also help to gather statistical data about international trade.

Finding the HS Code of your product can initially seem intimidating, but it doesn't have to be a hurdle. A straightforward way to obtain this information is to inquire directly with your supplier, who would be accustomed to handling such details.

If reaching out to your supplier isn't an option, don't worry! You can obtain this information yourself. The first step in this process is to visit the Harmonized Tariff Schedule, where you'll find an HS lookup tool. Once there, simply type in the name of your product in the search bar.

Review the results and focus on the 'Heading/Subheading' column - this is where you can find your product's HS Code.

It's paramount to note: Accuracy in choosing the correct HS Code is essential. A mistake could lead to delays in shipment and even potential fines, as customs authorities use these codes to determine import regulations and applicable duties.

Here's an infographic showing you how to read an HS code.

Step 3 - Calculate the Customs Value

Calculating the customs value can feel like a daunting task, but fear not, it is a straightforward process. It all boils down to understanding what the term really means. The customs value isn't simply the price tag on your goods from Malaysia. It's much more – it's their entire journey value until they reach Bangladesh. So, it's the Cost (of Goods), Insurance, and Freight (CIF) summed together.

For instance, let's assume your product costs $500. The international shipping for this batch is $300 and you've insured the goods for $200. Hence, the customs value becomes $500 (product cost) + $300 (freight) + $200 (insurance) = $1000.

This procedure ensures that the customs officials in Bangladesh are assessing duties based on the complete picture and not just the product cost. It is crucial in smoothening your import journey.

Step 4 - Figure out the applicable Import Tariff

An import tariff is a tax imposed on goods imported into a country. The amount varies based on the type of goods, their Harmonized System (HS) code, and the country of origin. In Bangladesh, they use an ad valorem tariff system - which means the duty is a percentage of the product's value. To find your tariff:

1. Identify your product's HS code. If you're importing headphones, for instance, the HS code is 85183000.

2. Visit the Bangladesh Customs Tariff page on their National Board of Revenue's website.

3. Enter your HS code and the country of origin, like Malaysia.

Afterwards, you'll see a tariff rate. Assume it's 15%. To calculate your import duties, you add the Cost, Insurance, and Freight (CIF) values. Let's say the CIF cost for your headphones is $10,000 USD. In that case, your import duty would be 15% of $10,000, or $1,500.

Remember to factor this into your projected costs to avoid any surprises. Upfront understanding of these duties lets you price your products competitively once they arrive at your market.

Step 5 - Consider other Import Duties and Taxes

When shipping goods from Malaysia to Bangladesh, aside from the standard tariff rates, you could encounter additional import duties and taxes. These can depend on both the country of origin and the specific goods being imported.

For instance, you might be liable for excise duty, a tax imposed on certain goods like alcohol, tobacco, and electronics. In some cases, anti-dumping taxes can apply too. Anti-dumping taxes come into play if you're selling a product cheaper in the foreign market than in your home market, to make sure local industries aren't undermined.

One notable factor is the Value Added Tax (VAT). Bangladesh charges a standard VAT rate of 15%, although this may vary based on the type of goods. So, if your cargo contains goods valued at $10,000 per se, you'd owe a VAT of about $1,500.

Don't treat these values as absolute, as the rates can vary. It's far better to check the latest updates from Bangladesh customs resources or consulting a local freight forwarder. By staying vigilant, you'll navigate this intricate process more smoothly!

Step 6 - Calculate the Customs Duties

Calculating customs duties requires incorporating essential elements such as the customs value and may include VAT, and anti-dumping taxes. The formula is: Customs Duties = Customs Value x Duty Rate.

First, let's consider a consignment with only customs duties. You imported wood furniture valued at $10,000, with a duty rate of 20%. Your customs duties amount to $2,000.

Secondly, when VAT comes into play, calculate it on the base of the Customs Value + Customs Duties. For instance, importing textiles worth $5,000 with a duty rate of 15% and VAT of 10%, you get customs duties of $750. Next add this to the base value to get $5750. The VAT is therefore $575.

Lastly, with anti-dumping and excise duties. Suppose you import ceramics worth $7,000 with a duty rate of 10%, VAT at 15%, anti-dumping tax of 5%, and Excise Duty of 10%. Your customs duty is $700, which adds to the base value to get $7700. Your VAT is $1155, the anti-dumping tax amounts to $385, and the excise duty is $770.

Understanding these calculations is paramount, yet overwhelming. But worry not, with DocShipper, we simplify the process. Our pro team will take over your customs clearance anywhere in the world, ensuring you're charged accurately. Reach out to us for a free quote within 24 hours. Let us make your trade process seamless!

Bill of Lading

Understanding the nuts and bolts of your Bill of Lading (BoL) is vital when shipping goods across borders. Acting as a receipt and a contract between you and your carrier, the BoL marks the transition of ownership for your Malaysia-Bangladesh freight. Consider opting for telex or electronic release. Why? It speeds up the process, eliminating the need for physical paperwork and reducing the chance of documents being lost. If you're exporting by air, you'll encounter the Air Waybill (AWB), a similar document that serves the same functions. Remember, precision in your BoL or AWB is key; any discrepancy can stall your freight, leading to delays and unforeseen costs. Do your homework, get it right, and expedite your shipment journey. Happy shipping!

Packing List

When shipping between Malaysia and Bangladesh, think of the Packing List as your shipment's resume. It's your chance to detail what's inside your shipment-- kind of like showing off your goods' skills and qualifications. Whether you're shipping by sea or air, this document is non-negotiable, and your accuracy in its preparation is critical.

Let's say you're shipping automotive parts from Kuala Lumpur to Dhaka. Your Packing List should precisely illustrate each item, from gear shafts to spark plugs, so customs officials can efficiently verify and process your shipment. Skimping on details or being inaccurate may cause unnecessary hold-ups at customs - a setback no shipper needs in a time-sensitive global market. Remember, your goods' journey relies on the Packing List, so keep it accurate!

Commercial Invoice

The Commercial Invoice is your key to smooth customs clearance when shipping goods from Malaysia to Bangladesh. This crucial document should clearly identify both the seller and buyer along with details of goods shipped, including product descriptions, unit price, and total value. Remember, inconsistencies can lead to delays. For example, if your shipment contains 1000 shirt units valued at $10 each, ensure the invoice total matches this ($10,000). A misalignment here could stall your shipment at customs. Moreover, verify the accuracy of Harmonized System (HS) codes as these can impact the applicable customs duties. Getting it right from the start saves you time, stress, and unexpected costs.