Ever wondered what China’s import fees are, and how these fees can impact other financial services in China that are relevant to your company? If you answered yes, then this article is for you.
China’s Import Fees
Import related value-added tax (VAT)
VAT is charged on sales and importation procedures in China. The following are the VAT rates for products and commodities imported into China (in effect from April 1st 2019):
- 3% VAT rate – for small tax payers
- 6% VAT rate – for value-added telecommunication and financial services
- 9% VAT rate – for agricultural, utility products and immovable properties
- 13% VAT rate – for other product types
- A new preferential policy stipulates that between April 2021 till December 2022, small-scale VAT taxpayers with monthly sales volume less than 150,000 RMB, or with quarterly sales volume less than 450,000 RMB will be exempt from VAT.
We recommend you check your company’s eligibility for any Covid-related preferential tax policy (industry-based, sized-based, annual revenue-based, etc.). Tax reliefs and their respective conditions vary across China, so each case should be examined individually.
The general formula for import VAT calculation is as follows:
Composite Assessable Price × VAT Rate
Read more about VAT refund in China
Consumption tax is one of the two indirect taxes imposed in China since 1994. It is applicable to companies who manufacture / sell / process / import taxable merchandise into China, such as tobacco, alcohol, jewelry & cosmetics, cars and motorbikes. Exported goods are exempted.
Consumption tax is levied on the following goods (14 product categories altogether):
- Products that are harmful to health and environment (e.g., tobacco, alcohol, etc.)
- Non-essential commodities and luxury goods (e.g., expensive jewelry, cosmetics, yacht, etc.)
- Products that consume high-levels of energy, and thus cause pollution (e.g., motorcycles)
- Non-recyclable products (e.g., oil, gasoline, disposable chopsticks, etc.)
The consumption tax rate for taxable products brought into China is subject to changes based on their type (vary on a broad scale of between 1%-56%). The calculation of consumption tax is done either by ad valorem or quantity methods.
Custom duties – importation
Custom duty for China imports is divided in accordance with various criteria:
- Most-favored-nation duty (MFN) rates – apply to goods imported from countries that are WTO members; goods imported from countries that have bilateral trade agreements with China; and goods produced in China. The MFN duty is usually lower than other duty rates, which are charged from non-MFN countries. From July 1st 2021, the MFN rate of 176 out of 484 tech products will be reduced.
- Conventional duty rates – are usually lower than MFN duty rates. Apply to goods traded between China and one of the 20+ countries that China has regional trade agreements with. In January 1st 2021, China reduced the conventional duty rates even further with certain trading countries (e.g., Australia, New Zealand, Switzerland and others).
- Special preferential duty rates – are usually lower than both MFN duty rates and conventional duty rates. Apply to goods imported into China from countries with trade agreements stipulating special preferential duty provisions with China.
- General duty rates – apply to goods imported into China from countries that are not part of any agreement with China, or brough into China from unknown origins.
- Tariff rate quota (TRQ) duty rates – apply to goods that are imported into China in quotas. Goods imported withing the quota enjoy a lower tariff rate. However, goods exceeding the quota are charged higher tariff rate.
- Temporary duty rates – apply to specific imported goods, which have been deliberately chosen by the Chinese government to increase imports and meet domestic demand. In 2019, low temporary duty rates were imposed on 706 imported products, which are lower than the MFN duty rate.
Major duty reliefs in place since 2020
- Administrative measures on import tax policy for major technical equipment: Since August 1st 2020, some key technical components and raw materials listed in the Catalogue of State-supported Key Technical Equipment and Products, are exempt from import VAT and customs duties.
- “Zero Tariff” policy on raw and auxiliary materials in Hainan Free Trade Port: Between December 1st 2020 – 2025, entities legally registered in Hainan Free Trade Port that import raw materials for production in-land, will be exempt from the three aforementioned taxes. The Positive List of the zero-tariff raw materials contains 169 items such as agricultural products, chemicals raw materials, optical fibers etc.
Last updated: July 2022
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