Import: Duties and Taxes

Duties and taxes are typically paid prior to the release of goods by customs.

Customs Valuation

Customs value of most goods is normally calculated ad valorem (according to value) based on cost, insurance, and freight (CIF) value, the sum of the following costs to the buyer:

• Transaction value of the goods
• Cost of transporting the goods
• Charges associated with transport of the goods
• Cost of insurance covering the period up to unloading of the shipment

Some circumstances, such as family relationship between the buyer and seller, make the transaction value suspect or irrelevant. In such cases, customs selects another valuation method, beginning with an appraisal method for the transaction value of identical goods. When the transaction value of identical or similar goods cannot be found, customs uses the subtractive method, meaning the price at which the goods actually sell on the Chinese market, minus costs of getting the goods to market (commissions, transport, import duties, and normal profit margin).

Alternate methods of valuation are also used for certain goods:

Specific Duty

A few specified commodities, such as broilers, beer, petroleum products, and film, are assessed at a specific rate. Specific duty is a quantity-based method of establishing the value of the goods. For instance, the duty and taxes levied on beer and petroleum products are based on liters of beer and tons of crude oil.

Compound Duty

A few specified commodities, such as video recording devices, are assessed at a compound duty rate.  A compound rate consists of a specific rate, e.g. 8 yuan per kilogram, plus an ad valorem rate, e.g. 10 percent of the CIF charges.

Tariff Rates

Tariff rates for imports may be divided into several categories: 

General (Most Favored Nomenclature) Tariff Rates

General tariff rates are the default rates for imports originating in countries with which the People's Republic of China has not concluded trade treaties or agreements containing reciprocal favorable tariff clauses. 

Minimum Tariff Rates

The minimum tariff rates apply to imports originating in countries with which the People's Republic of China has concluded trade treaties or agreements containing reciprocal favorable tariff clauses.

Interim Duty 

This is an interim or temporary duty on some commodities, often establishing a lower rate than normal in order to encourage imports. Most interim rates are in effect for one year. 

Special Duty 

Special duties are imposed as temporary protective measures to control the import of certain commodities.

Tariff rates range from 3 to 100 percent, with the highest rates reserved for goods such as automobiles. The average tariff level for agricultural products totals about 15%, while that of industrial goods is around 9 percent. 

Renewable-energy technologies enjoy special low rates: 3 percent for components of wind power plants, 6 percent for wind turbines, and 12 percent for photovoltaic (PV) systems.

Customs Duties

Duty rates vary significantly depending on the classification of the goods. Approximate duties for some items are as follows:

• Furniture: 10 percent
• Food: 10 percent
• Bedding: 10-20 percent
• Electronic items: 30 percent
• Cars: 80–120 percent
• Books and periodicals: 10 percent
• Alcohol and tobacco: 50 percent

The following are exempted from custom duties:

• Raw materials
• Taiwan is considered a province of China, and therefore no customs duties are levied.
• A batch of goods with duty under ¥50 (50 Chinese yuan)
• Advertising articles and goods samples without commercial values
• Materials donated by foreign governments and international organizations free of charge
• Goods lost before clearance by customs
• Necessary fuel, raw materials, and food carried by the transporting vehicles going in/out of the territory

Excise Duty (Consumption Tax)

Excise duty, called consumption tax, runs from 5 to 40%. It is imposed on tobacco products, liquor, wine, petroleum products, cosmetics, perfumes, shampoo, fireworks, expensive jewelry, motorcycles, automobiles, and automobile tires.

Ship Tonnage Dues

These dues are imposed on domestic and foreign vessels anchoring at Chinese ports; funds are used for seaway construction. Preferential rates apply to Chinese ships and ships of China's preferential trade partners. Upon payment, the carrier receives a Certificate for Ship Tonnage Duties, which must be shown to customs on exit from Chinese territory.

Antidumping

Antidumping duties are assessed on imported merchandise sold in China at less than the normal price of goods in the manufacturer's home market (also called fair market value). China has dozens of antidumping measures in place, affecting imports from 18 countries and regions, and numerous antidumping investigations have been initiated. Chemical products are the most frequent target of Chinese antidumping actions.

Countervailing 

Countervailing duties are levied to counter the effects of subsidies provided by a foreign government for merchandise exported to China. These foreign duties result in artificially low prices that can be detrimental to China's economy. China's countervailing duties are assessed according to its unfair-trade laws.

Value-Added Tax (VAT)

Goods imported into China are subject to value-added tax (VAT) based on their CIF value plus customs duty.

• As of 2022, the standard VAT rate is 13 percent
• Small and Medium Industries (SMEs) are subject to a (net) VAT rate of 4 to 6 percent

Service Charge

Subject to Service Charge

In China, the service charge is 3 percent of the CIF value. A service charge may be applied to:

• Reduction of duty or duty-free equipment imported by enterprises for technique promotions
• Special duty-free equipment used for teaching or research purposes by research institutes or schools
• Reduction of duty or duty-free shipments imported by a domestic organization or industry that uses a loan provided by a foreign government or by an international financial organization
• Duty-free equipment or machines under processing or compensation trade
• Duty-free commodities imported by industries or organizations in economic development zones, such as Special Economic Zones, High-Tech Industrial Development Zones, and the Open Coastal Cities
• Temporary duty-free materials, supplements, accessories, parts, and packing materials used for the processing of imported (supplied) materials or other materials supplied by foreign merchants that are to be re-exported after domestic processing or assembling
• Duty-free fuel, accessory, parts, and other commodities used for international shipping or for airlines
• Bonded or consigned duty-free commodities
• Other duty-free commodities designated by the State Council
• Temporary duty-free commodities designated by the Customs Office and the State Council.

Free from Service Charges

No service charge is imposed on the following shipments:

• Duty-free shipments according to the customs laws of the PRC and the Regulations on Import and Export Tariff.
• Aid donated by foreign governments and international organizations
• Aid or gifts donated by foreign organizations, foreign individuals, overseas Chinese, and Chinese from Taiwan, Macao, and Hong Kong
• Aid donated to disaster-stricken areas
• Commodities or equipment imported for the handicapped
• Office appliances imported by foreign embassies
• Commodities damaged prior to customs release and treated as duty-free commodities
• Duty-free compensatory commodities

Service Charge Lower than 10 Chinese Yuan:

• Commodities re-exported within 30 days and without further processing
• Other duty-free commodities designated by the Customs Office and the State Council

Note: The above information is subject to change. Importers and exporters are advised to obtain the most current information from a customs broker, freight forwarder, logistics professionals, or local customs authorities.

Source: General Administration of Customs

Article written for World Trade Press by Taylor Holloran, Jennifer Goheen, and Nina Bellucci.
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