Import-Export in China : fiscal impacts and challenges
Import-Export taxes can be a complex subject and is often something people are reluctant to tackle. Here, we will describe briefly different tax rates and declarations that are involved in these kinds of transactions for a Chinese general taxpayer.
Generally, there are three main kinds of taxes: Custom Duty, Consumption Tax and VAT. Each tax application and computation details are important and can be explained as described below:
- Custom Duty
Simply put, the custom duty amount can be calculated like this:
Custom Duty = dutiable value × Duty rate
The duty rate depends on a goods category list which is called HS-code in China, where specific duty rate applies for specific goods.
Below link can be used to find any duty rate you may want to use:
Export custom duty only apply to a few resource goods and semi-manufactured products so do not hesitate to contact us or a specific custom agency to be certain of the rate.
- Consumption Tax
China’s consumption tax covers imports that are harmful to human health, such as tobacco and alcohol, and luxury goods such as jewelry and cosmetics, as well as high-end goods such as passenger cars and motorcycles.
For imported goods, the consumption tax (CT) rate varies depending on the type of product to be brought into the country.
Consumption Tax = (dutiable value + custom duty) ÷（1-CT rate）× CT rate
- Imported goods VAT
From April 1, 2019, VAT on imported goods has been reduced to 9% or 13%, down from 10% or 16% previously. The 9% rate applies to certain goods, which fall mainly into the agricultural and utility categories, while the 13% tax applies to other goods.
Import VAT = comprehensive assessable price × VAT rate
= (dutiable value + custom duty + consumption tax) × VAT rate
Export Tax Rebate
Export tax rebate can make the overall tax burden of export goods return to zero and effectively avoid international double taxation.
The following criteria should all be met when applying for a export tax rebate as a foreign trade company:
- The goods must be within the scope of VAT and consumption tax collection
- Products must be the goods declared for export and shipped abroad
- Company must have proper financial records and treated transaction as export sales in accounting.
- Goods payment must be received and verified by SAFE (State Administration of Foreign Exchange)
If you are a manufacturing company applying for export tax rebate, besides above four criteria, the goods applying for tax refund must be self-produced goods or deemed self-produced goods of the manufacture enterprise.