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Duty is charged on the CIF value — goods plus freight and insurance — and import VAT is then charged on the CIF value plus the duty. That cascade is why the effective tax on a shipment exceeds the sum of the two headline rates.
Import charges
CIF = goods + freight + insurance; duty = CIF x duty rate; VAT = (CIF + duty) x VAT rate
Because VAT is levied on the full value of the import as landed, which by definition includes the duty paid. It is standard practice in most VAT systems.
Enormously. Duty rates range from zero to over 20% depending on the tariff classification, and misclassification is the most common source of unexpected bills.