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Few China Export Duties that You Need to Pay for China Sourcing

China sourcing is the process through which businesses locate, get in touch with, and collaborate with Chinese suppliers. All those businesses that want to strengthen their supply chain will benefit from using this method.

There are several reasons to go for sourcing from China. For example, a few businesses may decide to outsource their manufacturing goods or import certain specific raw materials needed for their domestic production.

To offer more boost domestic consumption or more opening up the market, China has implemented few China export duties as well as few rules to reduce import and export tariffs.

Companies that import and export taxable goods and services to China may be impacted by these developments.

Let us, therefore, discuss briefly in this post various China export duties that need to pay while dealing with any Chinese suppliers.

  1. Value-added tax (VTA)

The import value-added tax from China on imported items will reduce from the existing rates of 10% or 16% to 9% or 13% from 1st April 2019, as per the State Administration of Taxation’s declaration to offer better foreign trade environments.

Those items that fall under the categories of agricultural and utility will attract a 9% tax, while other items that are subject to value-added tax are manufactured goods, which will be taxed at the rate of 13%.

The same 6% VAT is still applied to taxable services rendered in China by foreign organizations or individuals.

The following formula can be used to determine the import VAT:

  • Import VAT = Composite assessable price multiplied by VAT rate.
  1. Consumption tax (CT)

A CT (consumption tax) is imposed on businesses engaged in the following activities:

  • Manufacturing and importing any taxable goods
  • Marketing for any taxable goods via agencies
  • Selling taxable goods directly to consumers.

On any imported items, Chinese consumers have to pay a consumption tax that can damage their health, like

  • Alcohol
  • Cigarettes

Also, a few luxury items like

  • Jewellery
  • Cosmetics
  • Cars

The tax rate varies for imported items according to the kind of imports made.

The ad valorem tax method, the quantity tax technique, or the compound tax approach can all be used to calculate excise tax.

  1. Customs duties

Customs duties will include both import and China export duties. Import duties include:

  • Most-favoured-nation (MFN) rates
  • Provisional rates for imports
  • Regular rates
  • Special preferential rates
  • Tariff-rate quota (TRQ) rates

Export duty rates on the other hand are set as a single type. But there might also be temporary export tax rates that might be put in place for a set amount of time.

Following the “2022 Tariff Adjustment Plan” China will start levying tariffs on 8,930 imported products and 106 exported products on January 1, 2022.

China to add more tax items 

China will update its subitems in 2023 to properly reflect the needs of industrial development and scientific and technological advancement, including tax items like:

  • Surgical robots
  • Vegetable seeds
  • White tea

In 2020, China first unveiled its dual circulation strategy. Such a 2-pronged approach has been aimed to enhance domestic demand in China and also at the same time serve export markets to encourage the growth of both the domestic and international markets.

This year, China is going to work so that domestic consumption is enhanced and also attracts foreign investment and accelerates its economic growth.

The CEWC (Central Economic Work Conference), which is an annual conference of China’s senior leadership is going to lay out the current economic agenda.

Consider the latest developments

Businesses that are engaged in importing and exporting taxable services and goods to China will get impacted by the latest tariff changes.

To access China’s expanding consumer markets, foreign stakeholders must consider various China export duties that may get updated from time to time.

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