Calculating taxes and duties for import
Importing goods to China implicate three types of taxes – customs duties, value-added tax (VAT), and consumption tax (CT) – depending on the nature of the imported good and whether it falls under CT specified categories.
The amount of import tax liability and who is ultimately responsible for paying them generally depends on how the sales contract is concluded between buyer and seller.
Customs duties include import duties and export duties, which are computed either on an ad valorem basis or quantity basis. Import duty rates consist of:
- most-favored-nation (MFN) duty rates
- conventional duty rates
- special preferential duty rates
- general duty rates
- tariff rates for quota items
- provisional duty rates
Among others, MFN duty rates are the most commonly adopted import duty rates. They are much lower than the general rates which apply to non- MFN nations. The complete list of products affected by MFN duty rates can be found in China’s Customs Tariff Implementation Plan, which is subject to yearly update.
Terminology of import taxes
The International Chamber of Commerce’s (ICC) international commercial terms is the most commonly used terminology for expressing pricing or risk-related issues associated with goods transit…
Tax calculation
The following formulae show how DPV and CAP are calculated…
Lower tariff rates on consumer goods
On December 23, 2019, China’s Customs Tariff Commission of the State Council announced it will temporarily adjust import tariffs on 859 commodities to come into effect January 1, 2020.
The adjusted tariffs will be lower than that of the most-favored-nation (MFN) tax rate in 2020. It will predominantly affect three categories of goods:
- consumer goods
- raw material for pharmaceutical goods
- raw material for manufacturing of high-tech goods
Below is a table of some of the goods affected by these reduced tariffs.