Does the fob price include tax? How to calculate?

Merchants doing cross-border e-commerce in the United States need to consider not only the product price, but also the fob price. It is best to determine the fob price based on the sales volume and price of the product itself. Does the fob price include tax?

Tax not included

How to calculate fob price?

FOB price calculation formula:

FOB={{1-[tax refund rate/(1+VAT rate)]} × RMB price including tax}/spot purchase price

Formula analysis:

FOB = (RMB price including tax - tax refund income) / spot purchase price

Among them: Tax refund income = RMB tax-inclusive price × [tax refund rate/(1+VAT rate)]

but:

FOB = {RMB price including tax - {RMB price including tax × [tax refund rate/(1+VAT rate)]}}/spot purchase price

Spot buying price

In addition: If your product is subject to export tariffs, the FOB price is calculated like this.

FOB USD price = [FOB RMB price × (1 + tariff rate)] / USD spot purchase price

When calculating export prices, why is the exchange rate based on the spot purchase price?

Exchange rate: The exchange rate used in foreign currency telegraphic transfer, mail transfer or bill transfer transactions.

Generally it is higher than the spot exchange rate, because foreign currency cash generally cannot be circulated in the country.

Buy Price:

As long as you do not convert USD into RMB, the accountant will record the amount in RMB based on the middle price. If you convert USD into RMB, the bank will calculate it based on the spot purchase price.

The bid price is the price that a bank is willing to pay to acquire foreign currency.

FOB price calculation example:

Take a product with a unit price of 10 yuan and a quantity of 1000 as an example. Assuming the profit is 5 yuan, and the freight and consignment fees to ship the goods to the port are 500, the actual profit is 5*1000-500=4500.

The calculation formula is: FOB = (unit price of product + profit) / exchange rate. The exchange rate changes every day and can be checked online. With an exchange rate of 6.4, the calculated result is 2.3, so you can directly quote it when quoting. Take the actual profit as a reference. If you are not satisfied with the actual profit, increase the value of the profit cell and calculate FOB. The most difficult thing to determine is miscellaneous expenses such as freight. Due to different quantities, the different prices of transportation will change, and this must be summarized based on actual experience.

In summary, the fob price does not include tax. Generally speaking, the fob fee should not exceed 1% of the sales. So when setting the fob price, it is best to first determine the sales volume of the product.