Frequently Asked Questions on China’s Import Tariffs and Taxes
China levies tariffs and taxes on most Canadian products shipped into the Chinese market. This article compiles questions frequently asked by Canadian exporters pertaining to Chinese tariffs and taxes.
Questions 1: What is an HS code?
An HS (Harmonized Commodity Coding System) code, also known as a tariff code, is a universally accepted classification system, with 6 to 10 digits, to allow countries to identify goods, administer customs programs and collect trade data. An HS code is the basis to determine tariffs, taxes and other regulatory measures on imports into China.
China uses a 10-digit system for both exports and imports, while Canada uses 8 digits for exports and 10 digits for imports. Despite slight differences between the Canadian and Chinese codes, the Canadian codes can be used as a reference for exporters to determine the codes for their own products.
Questions 2: What is a tariff schedule?
The General Administration of Customs of China publishes an annual tariff schedule including HS codes, import tariff rates, import value-added tax (VAT) rates, import consumption tax rates, export tariff rates and regulatory measures. The tariff schedule remains stable as a whole, though there are minor adjustments on HS codes and tax rates every year. Please contact the Trade Commissioner Service at the Canadian Embassy to China if you are interested in the up-to-date tariff schedule.
Questions 3: What tariffs and taxes can Canadian exporters expect to pay China Customs?
Import tariffs are charged on most imports primarily ad valorem, and the rates vary widely by product. Since both China and Canada are members of the WTO , Canadian products are entitled to the Most-Favoured-Nation (MFN) rates, which are lower than the general rates.
Import VAT is levied on almost all products. A rate of 13% applies to grains, edible vegetable oils, tap water, heating, air conditioning, hot water, coal gas, liquefied petroleum gas, natural gas, methane gas, coal/charcoal products for household use, books, newspapers, magazines, feeds, chemical fertilizer, agricultural chemicals, agricultural machinery, plastic film for farming purposes, and other goods prescribed by the State Council, while the remaining products are subject to a rate of 17%.
Import consumption taxes are charged on a limited number of consumer goods, such as tobacco, liquor, cosmetics, rubber tyres, jewellery, automobiles, high-end watches, and golf clubs and balls. The rates range from 1% to 40%.
Questions 4: How can exporters estimate total tariffs and taxes paid to China Customs?
Import tariffs and taxes are assessed on the transaction value of the goods, including packing charges, freight, insurance premiums and other service charges incurred prior to the unloading of the goods at destination.
Canadian exporters can use the following formula to calculate tariffs and taxes (if applicable) due to China Customs:
Import Tariff = Value of Goods x Tariff Rate
Import VAT = (Value of Goods + Import Tariff + Import Consumption Tax) x VAT Rate
Import Consumption Tax = [(Value of Goods + Import Tariff) / (1 – Consumption Tax Rate)] x Consumption Tax Rate
However, China Customs has complete discretion to assess the value of the goods and the tariffs and taxes to be levied.
Questions 5: Are tariffs and taxes levied on samples?
Canadian exporters can apply for tariff and tax exemptions on samples, as long as a cash deposit or a guarantee equivalent to collectable tariffs and taxes is provided to China Customs and provided the samples will be shipped out of China within six months (or an extension approved by China Customs).
These exemptions also apply to: the import of goods for display or use at exhibitions and fairs; items for performance or contest in cultural and sports exchanges; apparatus for press, cinematography and television programs; apparatus for scientific research, pedagogical and medical activities; tools for installation, adjustment or test of equipment etc.
With respect to other import regulatory measures in China, please refer to Import Regulations China. For further inquiries on import tariffs and taxes in China, Canadian exporters are welcome to contact the Trade Commissioner Service at the Canadian Embassy to China.