FOB, CIF and DDP Compared for Taiwan Imports

These three terms cover most of what a small importer will ever quote against, and the choice between them is usually made on price. It should be made on two other things: where the risk sits during the voyage, and whether you want to see what was declared on your behalf.

Last updated:2026-08

Two handover points define all three

	FOB	CIF	DDP
International freight	Buyer	Seller	Seller
Insurance	Buyer	Seller	Seller
Risk transfers	On board at port of shipment	On board at port of shipment	On delivery at destination
Export clearance	Seller	Seller	Seller
Import clearance	Buyer	Buyer	Seller
Import duty and tax	Buyer	Buyer	Seller

Two rows deserve attention. Risk transfer is identical under FOB and CIF despite the cost difference, and the import clearance row is the only one where DDP genuinely differs from CIF in substance.

FOB and CIF differ on cost, not risk

Under both, risk transfers when the goods are loaded at the port of shipment. The voyage is at the buyer's risk either way.

What differs is who pays. Under CIF the seller pays freight and insurance to the destination port — for a voyage during which the goods are the buyer's risk. The seller arranges the insurance that protects the buyer.

This is not a drafting quirk. It follows from the C-group structure in the Incoterms rules, where the seller's cost obligation extends beyond the point of risk transfer. See Incoterms 2020 for the full set.

The practical consequence: if goods are damaged in transit under CIF, the buyer bears the loss and claims under a policy the seller took out. Confirming that policy exists and covers the right value matters more than under FOB, where the buyer arranged it themselves.

What each does to the customs value

The term never changes the customs value. It changes where the components come from.

Term	Invoice amount	How freight enters	Watch out for
FOB	Goods only	Added from freight documents	Missing freight evidence
CIF	Goods + freight + insurance	Already included	Nothing — this is the cleanest
DDP	Delivered price	Already included, plus items that must be removed	Duty and tax are inside the figure

CIF maps most directly onto the definition of customs value, which is why it is the least error-prone.

DDP is the awkward one. The delivered price includes the import duty and business tax, and those are not part of the customs value. Declaring the DDP invoice amount as the value overstates the base and inflates every layer of tax above it. See How customs value is calculated.

The real trade-off with DDP

DDP is sold on convenience: one price, seller handles everything.

What you give up is visibility. Under DDP the seller or their agent files the declaration. You do not see:

• What customs value was declared
• Which tariff code was used
• What was actually assessed

If any of those was wrong, the consequences still attach to the goods. A misclassification surfaces at post-clearance audit, and the goods are yours — see What tariff misclassification costs.

There is a second issue. Import clearance requires a party able to act as taxpayer in Taiwan. A foreign seller with no local presence may be unable to perform the obligation they quoted, which is how DDP shipments end up stalled at the border with neither party positioned to clear them.

Choosing

FOB suits a buyer with an existing freight relationship or one shipping regularly enough to negotiate rates. Control over the freight leg is the benefit; arranging it is the cost.

CIF suits most first-time and occasional importers. The seller handles the leg that is hardest to organise from abroad, the buyer retains clearance control, and the invoice maps cleanly onto the customs value.

DDP suits a buyer who wants a single landed price and is content not to see the tax detail — and only where the seller can demonstrably perform import clearance into Taiwan.

A note on quoting comparisons

Comparing an FOB quote against a CIF quote requires adding freight and insurance to the FOB figure first. Comparing either against DDP requires adding the estimated duty and tax.

A DDP price that looks close to a CIF price plus tax is usually not. The seller is pricing in their own risk and handling, and that margin is invisible precisely because the components are not itemised.

Run the FOB and CIF cases through the Taiwan import duty calculator to get a comparable landed figure before deciding.

Switching term mid-relationship

Suppliers often start a relationship on CIF and offer FOB once volume justifies it. Two things change that are easy to overlook.

The invoice stops carrying the freight. Under FOB the invoice shows goods only, so the freight has to be evidenced separately for the customs value. A missing freight document does not reduce the value — it invites Customs to impute one.

Insurance becomes yours to arrange. Under CIF the seller held the policy; under FOB nobody does unless the buyer arranges it. A shipment moving on FOB with no insurance is uninsured for a voyage the buyer already bore the risk of.

Neither is a reason to stay on CIF, but both are reasons to make the switch deliberately rather than accepting a lower unit price and discovering the consequences later.

Further reading

For all eleven terms and where each transfers risk, see Incoterms 2020. For the tax that follows, see the Taiwan import tax guide and Duty, business tax and commodity tax. For what happens when a declared value is questioned, see Customs valuation in Taiwan.

Primary source: the International Chamber of Commerce Incoterms rules.

Frequently asked questions

What is the difference between FOB and CIF?

Under FOB the buyer pays international freight and insurance; under CIF the seller does. Risk transfers at the same point in both — when the goods are loaded at the port of shipment — so under CIF the seller pays for a voyage that is at the buyer's risk.

Is DDP better because the seller handles everything?

It is simpler but less transparent. The seller arranges import clearance and pays the duty and tax, so the buyer sees one delivered price and does not see what value was declared, under which tariff code, or what was actually assessed.

How does the term change my customs value?

It does not change the value, only where the numbers come from. Customs value is always goods plus international freight plus insurance. Under FOB the freight is added from separate documents; under CIF it is already in the invoice; under DDP the invoice contains items that must be excluded.

Which term should a first-time importer use?

CIF is usually the best starting point. The seller arranges freight and insurance to the destination port, which removes the hardest logistics to organise from abroad, while the buyer keeps control of import clearance and sees the assessment.

Can a foreign seller actually perform DDP into Taiwan?

Not always. Import clearance requires a party able to act as taxpayer in Taiwan. A seller with no local presence may be unable to complete what DDP obliges them to do, which is why DDP quotes sometimes fail at the border.