Why the order changes the total
DHL sets the sequence out as two formulas, one feeding the other: “CIF Value x Duty Rate %” for the duty, then “(CIF Value + Import Duty) × Tax Rate %” for the tax. Its worked example uses the UK rate to explain why the second formula reaches back for the first: “Import tax for the UK (VAT) is calculated after the duty has been added to the CIF value. This ensures the tax is applied to the full ‘landed’ value of the product.” The country in the example changes nothing about the order — it holds wherever a destination layers a consumption tax on top of duty. DHL, Import Taxes and Duties in Japan: Calculation and Customs Tips, dhl.com, read 2026-08-30.
Skip that second step and a shipper who simply adds a duty percentage and a VAT percentage together, then applies the combined rate once, understates the bill every time duty is greater than zero — the tax is supposed to land on a slightly bigger number than the one duty landed on, not the same one.
Two ways a country prices the base
DHL's guide to import duty by country states that “customs authorities typically calculate duties based on the CIF Value, the total value of the product plus shipping and insurance costs,” which is the more common approach worldwide. DHL, Import Duties and Taxes by Country, dhl.com, read 2026-08-30.
The United States runs the calculation differently for its own imports. Under 19 CFR 152.103, the dutiable value is built from the price actually paid or payable for the goods, and charges incident to the international shipment can be excluded from that value when they are identified separately from the price of the goods rather than folded into one combined figure. In practice that keeps a US import's customs value closer to a factory or FOB price than to a full CIF number, which is the opposite default from most trading partners. Code of Federal Regulations, Title 19 §152.103, U.S. Customs and Border Protection, read 2026-08-30.
Neither rule is optional and neither is a guess: the destination country's own customs authority decides which basis applies to a given shipment, and that decision is what the "basis" selector above is asking you to state, not calculate.