Import-Export Taxes and Duties in China
One of the most important issues that are facing companies conducting trade with China, is the subject of taxes and duties.
The taxes and duties imposed on goods imported into, and exported out of the country.
This is a complex subject that rates and regulations differ of course from one product to another.
However, there are general tax principles to follow, we will outline below the most important issues foreign companies should be aware of. Importing to and exporting, from China, generally involves three types of taxes:
- Value-added tax
- Consumption tax
- Customs duties
1. Value-added Tax for Imported Goods
Imported goods to China are subject to value-added tax (VAT), and the applicable tax rates are the same as those applied to goods sold within the domestic market (i.e. 17 percent, and 13 percent for some goods). VAT is payable on the day of customs clearance.
The input VAT imposed on importing goods can be used to deduct the output VAT paid when the imported goods are sold in the domestic market.
2. Consumption Tax for Imported Goods
Items subject to consumption tax (CT) include luxury products such as high-end watches, non-renewable petroleum products such as diesel oil, and high-energy consumption products such as passenger and motorcycles.
Import CT is collected either on an ad valorem basis or quantity basis, with tax rates and amounts varying greatly. CT should be paid within 15 days from the day that Customs issues the Import CT Bill of Payment.
3. Customs Duties
Customs duties include import duties and export duties, with a total of 8,238 items taxed, according to China’s 2013 Customs Tariff Implementation Plan (“2013 Tariff Plan”).
Customs duties are computed either on an ad valorem basis or quantity basis.
Duty rates on import goods consist of:
- Most-favored-nation duty (MFN) rates
- Conventional duty rates
- Special preferential duty rates
- General duty rates
- Tariff rate quota (TRQ) duty rates
- Temporary duty rates.