Includes information on average tariff rates and types that U.S. firms should be aware of when exporting to the market.
Last Published: 7/30/2019

The Customs Clearance Handbook (2016), compiled by the General Administration of Customs (China Customs), is a comprehensive guide to China’s customs regulations. This guide contains the tariff schedule and national customs rules and regulations, and can be purchased at bookshops in China or ordered from the following online bookstore:

China Customs Press Online Bookstore
1st Floor, East Wing,
General Administration of Customs of PRC, No. 6, Jianguomen Nei Street,
Dongcheng District, Beijing, China
Phone: (86 10) 6519-5616
Fax: (86 10) 6519-5127
E-mail:  bjjyssd@sina.com

Tariff Rates

China Customs assesses and collects tariffs. Import tariff rates are divided into six categories: general rates, most-favored-nation (MFN) rates, agreement rates, preferential rates, tariff rate quota rates, and provisional rates. As a member of the WTO, imports from the United States are assessed at the MFN rate. The five Special Economic Zones, open cities, and foreign trade zones within cities offer preferential duty reductions or exemptions. Companies doing business in these areas should consult the relevant regulations.
 
China may apply tariff rates significantly lower than the published MFN rate for goods that the government has identified as necessary to the development of a key industry. For example, China's Customs Administration has occasionally announced preferential tariff rates for items in the automotive, steel, and chemical sectors.

Customs Valuation

The dutiable value of an imported good is its Cost, Insurance, and Freight (CIF) price, which includes the normal transaction price of the good, plus the cost of packing, freight, insurance, and seller's commission. According to Customs Order 954, the “Administrative Regulation on Examination and Determination of the Dutiable Value of Imported and Exported Goods,” China Customs is tasked with assessing a fair valuation to all imports.

To assess a value, all China Customs officers have access to a valuation database that lists appropriate valuations for various imports, based on international market prices, foreign market prices, and domestic prices. China Customs officers check the price reported by the importer against this database. Normally, China Customs officers will accept the importer’s price. However, if the reported value is too far out of line with the database, the China Customs officer will estimate the value of the goods based on methods listed in Article 7 of the PRC Administrative Regulations. For agricultural products, China Customs information frequently does not reflect seasonal changes in pricing or the effects of quality/grade on pricing. As a general rule, China Customs will charge against the highest price reflected in their database. The Foreign Agricultural Service (U.S. Department of Agriculture) is working with China Customs to improve their understanding of agricultural products pricing.
 

Taxes

On top of normal tariff duties, both foreign and domestic enterprises are required to pay value-added taxes (VAT) and business taxes. VAT is assessed on sales and importation of goods and processing, repairs, and replacement services. Business taxes are assessed on providers of services, the transfer of intangible assets, and/or the sales of immovable properties within China. VAT is assessed after the tariff and incorporates the value of the tariff. China is bound by WTO rules to offer identical tax treatment for domestic and imported products. VAT is collected regularly on imports at the border. Importers note that their domestic competitors often fail to pay taxes. VAT rebates up to 17% (a full rebate) are available for certain exports. The Chinese government frequently adjusts VAT rebate levels to fulfill industrial policy goals. Exporters complain that it takes months to obtain the rebates and amounts are often miscalculated. Also, rebates are limited by local budgets and coastal provincial authorities often run out of funds for rebates well before the end of the year. The applicable rebate method varies according to the date the enterprise was established.
 
The U.S. signed a tax treaty with China that took effect on January 1, 1987 (United States The People's Republic of China Income Tax Convention). It provides certain benefits and allows for the avoidance of double taxation, but in order to enjoy the benefits provided by the tax treaty, non-residents (enterprises and individuals) must register with their local tax authorities in accordance with Circular 124. The corporate income tax rate in China is 25%. The law includes two exceptions to the 25% flat rate: one for qualified small-scale and thin profit companies, which will pay 20%, and another to encourage investment by high tech companies, which will pay 15%. Additional incentives are available for investments in resource and water conservation, environmental protection, and work safety. Preferential tax treatment for investments in agriculture, animal husbandry, fisheries, and infrastructure development continue to be applied.
 
In recent years, China has periodically cut import tariffs to improve Chinese citizens’ access to cutting edge products, to introduce further competition in the market, and in the spirit of the government’s promises to open the Chinese market. In May 2018, China announced the reduction in tariffs on 1,449 eight-digit tariff lines for most-favored nations by an average reduction of 55.9%. 
 
During the APEC meetings in Beijing in November 2015, China agreed to participate in the expansion of the WTO’s Information Technology Agreement (ITA Expansion).  On October 26, 2016, China submitted its ITA expansion commitments to WTO Director-General Roberto Azevêdo for inclusion in its WTO schedule of concessions.  China’s commitments were ratified by the country’s Standing Committee of the National People’s Congress on September 3, 2016, and China commenced implementation of its first tariff cuts on covered goods from September 15, 2016.

 

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