China: Domestic Taxation
Import and Export Taxation
This page was last updated on 26 July 2019.
China's membership of the World Trade Organization (WTO) since 2005 has made for plenty of changes to its import/export taxation regime. In December 2009, China announced increases on import tariffs for fuel oil and jet fuels, commencing 2010. Both tariffs were increased by 1%, to 3% for fuel oils, and to 6% for jet fuels. The change does not, however, affect tariffs on petrol and diesel, the tariff for which remain at 1%; this tariff was introduced in 2008, reduced from 5-6%.
As part of its agreement with the WTO, China is also reducing tariffs on other imports starting 2010. Tariffs on imported indium are being reduced to 5% (from between 10% and 15%), and are being reduced by 23-38% on imported rubber. There will be further tariff reductions on over 600 other products, including phosphate ore, coal and naphtha. Consequently, tariffs on industrial products are to fall on average to around 8.9%, and on agricultural products to around an average of 15.2%.
The increase in fuel tariffs aims to reduce energy consumption and help combat pollution in China.
One peculiar feature of China's taxation system is the existence of export rebates, effectively making up for deficiencies in the VAT system.
The June 2010, decision to abolish tax rebates to commodity exporters ended what the US considered ‘unfair subsidies’, though the effects on Chinese steel producers could be serious. The removal of the rebates, which amounted to 9% for steel production, were effective from 15 July 2010 and affected the production of hot rolled steel, coil, some narrow cold-rolled coil products and hot-dipped galvanized coil. China also announced the removal of 5% rebates for the production of starch, ethanol and copper products, including bars, wires and some nickel products. China is the world’s biggest producer of many base metals and also one of the world’s biggest consumers.
The move is also intended to reduce output for export because of the huge internal demand in China for base metal production, as well as easing trade tensions between China and in particular, the US. China’s steel exporters have already fallen foul of anti-dumping measures imposed by the US government, partly because of the tax rebates which it regards as unfair.
In August, 2010, Chinese vice-minister of commerce, Jiang Yaoping, announced that export tax rebates would be cut on certain products with the aim of restricting the export of "high-pollution, high-energy consumption and resource-dependent" products and accomplishing energy and emission reduction targets for the five-year plan period (2006-2010).
China removed export tax rebates on 406 items effective from 15 July 2010, including certain steel products, non-ferrous processed metal products, silver powder, alcohol, corn starch, crop protection products, medicine, chemicals, plastic products, rubber and related products. The tax rebate rates on these items ranged from 5% to 17%.