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on Wednesday, 08 March 2017
in Business in China

Brief Guide to the Latest Import Duty Regulations in China

In 2016, there were several changes in import duty regulations. Goods that are imported into the Chinese territory may be subjected to three types of taxes and duties: value-added tax, consumption tax and customs duty.

Taxpayers of the three types of taxes and duties include all enterprises, units, household businesses and other individuals engaged in production or importation of taxable consumer goods within the territory of the People’s Republic of China.

How to calculate the total taxes and duties when importing goods into China

The imported goods are taxed on the basis of the composite assessable price by applying the applicable tax rate. The formula for computing the tax payable is:

Tax payable=composite assessable price + applicable VAT rate

Composite assessable price=customs completion pricecustom duty

Where the taxpayers import taxable goods under the consumption tax, the consumption tax payable shall be included in the composite assessable price.


1. Value added tax for imported goods

Depending on the kind of goods, this will be charged either at 13 percent or 17 percent of the nation’s value added tax (VAT). The following table illustrates what kind of goods are VAT eligible and their VAT rate.

Table of VAT Taxable Items and Rate—Value Added Tax

 ITEMS  RATE
1)Agriculture, forestry, products of animal husbandry, aquatic products;

Edible vegetable and grain duplicates;

2) Tap water, heating, cooling, hot air supply, hot water, gas, liquefied petroleum gas, natural gas, coal/charcoal products for household use; books, newspapers, magazines (excluding the newspapers and magazines distributed by the post department);

3) Feeds, chemical fertilizers, agricultural chemicals, agricultural machinery and plastic converting film for farming;

4) Selected metal mineral products, selected non-metal mineral products, coal
 13%
1) Crude oil, mine salt and goods other than those listed above;
2) Taxable services
 17%

(Source: Tax Policy Department, Ministry of Finance China)

 

2. Consumption tax

The current system of consumption tax in China was implemented in 1994 via the Interim Regulations on Consumption Tax passed by the State Council in 1993, and further amended in 2008. On November 25, 2014, the MOF (Ministry of Finance) and the SAT (State Administration of Tax) jointly released further adjustments and 4 types of goods were exempted from consumption tax. According to the latest adjustment, consumption tax can be applied to the below imported items:

Table of Taxable Items and Rates—Consumption Tax

 Taxable items  Tax rates (tax amount)
1. Tobacco

(1) Cigarettes

Grade A cigarettes

Grade B cigarettes 

(2) Cigars

(3) Sliced tobacco

 

 

45% + 0.003 RMB/cigarette

30% + 0.003 RMB/cigarette

25%

30% 

2. Alcoholic drinks
(1) White spirits / distilled spirits  
(2) Yellow rice wines 
(3) Beer

Grade A beer
Grade B beer 
(5) Other alcoholic drinks 
 

20% + 0.5 RMB/500 gram 

240 RMB/ ton


250 RMB/ ton

220 RMB/ ton

10% 

3. Cosmetics 30%
4. Precious jewelry, pearls, precious jades and stones 
(1) Gold and silver jewelry 
(2) Other jewelry, pearls, precious jade and stones

5%
10%
5. Firecrackers and fireworks 15%

6. Product oil

(1) Gasoline

(2) Diesel

(3) Aviation kerosene

(4) Naphtha

(5) Solvent naphtha

(6) Lubricant oil

(7) Fuel oil

 

0.28 RMB/liter

0.10 RMB/liter

0.10 RMB/liter

0.20 RMB/liter

0.20 RMB/liter

0.20 RMB/liter

0.10 RMB/ liter

8. Motorcycles

(1) Cylinder capacity of 250ml

(2) Cylinder capacity more than 250ml

 

3%

10%

9. Motor cars

(1) Passenger cars

Cylinder capacity less and equal to 1.0 liter

Cylinder capacity between 1.0 and 1.5 (including) liters

Cylinder capacity between 1.5 and 2.0 (including) liters

Cylinder capacity between 2.0 and 2.5 (including) liters

Cylinder capacity between 2.5 and 3.0 (including) liters

Cylinder capacity between 3.0 and 4.0 (including) liters

Cylinder capacity more than 4.0 liters

(2) Medium sized commercial passenger cars

 

 

1%

3%

5%

9%

12%

25%

40%

5%

Source: SAT (State Administration of Tax, China) http://www.chinatax.gov.cn/n810341/n810765/n812171/n812680/c1190924/content.html

 

3. Duty rates on imported goods

Depending on the type of goods you import and the trading treaties the exporting country and China have, the duty will vary. In the following table you will find the segments of duty rates on imported goods.

 Type of Duty  Description
Most-favored-nation duty (MFN) rates Lower rates than general duty and can apply to:
1.Goods imported to China from WTO members
2.Goods originating from countries that have bilateral trade agreements containing provisions on MFN treatment with China
3. Goods originated from China
Conventional duty rates Applied to imported goods that originate from countries that have regional trade agreements which include preferential provisions on duty rates with China
Special preferential duty rates Applied to imported goods from countries with trade agreements which include preferential duty provisions with China.  (Usually lower than MFN rates and conventional duty rates) 

General duty rates

General duty rates are applied to imported goods originating from countries or territories that are not covered in any agreements or treaties, or are of unknown place of origin.

Tariff rate quota (TRQ) duty rates

Applied to goods imported within the quota that are subject to a lower tariff rate while goods imported that surpass the quota face higher tariff rates.  
Temporary duty rates Used to boost imports and meet domestic demand. In 2016, China implemented temporary tax rates, which are lower than the MFN tariffs on more than 787 imported commodities, for example: diapers (2%), and skincare products (2%).

Source: Dezan Shira

In the temporary duty rates released in 2016, custom duty has been removed for 30 types of goods while 8 types of goods received lower custom duty rates, e.g. the duty rate for imported sunglasses decreased from 12% in 2015 to 6% in 2016.


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