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China Reinstates
Import Tax Reduction
and Exemption for 20
Commodities
By Dorcas Wong, China Briefing, Dezan Shira & Associates
From August 5, 2020, China has reinstated addition to other key types commodities, such as
its tax reduction and exemption policy for machinery, equipment, construction materials
20 commodities, meaning importers can now special vehicles, office supplies, and much more.
enjoy tariff exemptions and import-tax related This was originally introduced so that China
deductions where applicable. This is according could build up its own manufacture and supply of
to the Announcement about Stopping Tax these mass-produced technology and household
Reduction & Exemption for 20 Commodities, goods. However, as these items have now become
jointly released by the Ministry of Finance, the ubiquitous in China’s domestic markets, the
General Administration of Customs, and State continuation of this policy was no longer deemed
Administration of Taxation earlier this month. to have a significant impact on the relevant
industries.
In short, the announcement will mean that
importers of the stipulated commodities will In practice, this will mean that consumers and
benefit from preferential tax policies that businesses importing these commodities can
otherwise apply to goods, trade methods, and benefit from the applicable tax reductions and
enterprises of their type. exemptions.
Here we explain some of the key details For example, under China’s adjusted parcel tax
surrounding this policy reinstatement. scheme, items brought back to China in person
Restarting preferential import policies for 20 are subject to tax-free threshold – capped at
commodities RMB 5,000 (US$722.4) for Chinese nationals
and RMB 2,000 (US$289) for foreign nationals.
Beginning August 5, 20 types of electronic Within this threshold, the item is tax-free if it is
appliances, household consumer items, and food deemed to be for self-use.
products will be subject to tax exemptions that are
otherwise applicable to their product type, trade Ordinarily, cigarettes, alcohol, and these 20
method, region, or enterprise type. categories of items listed in the notice are
excluded from the exemption. However, now
This is a stark reversal of the 1994 policy Second with the new announcement, the stipulated 20
Step of Clearing up Tariffs and Import Link commodities can enjoy this tax exemption and
Tax Reduction and Exemption (Guo Fa [ 1994] also benefit from the tax exemptions within this
No. 64 ), which prevented the application of tax threshold.
exemptions and tax reduction policies on a whole
range of imported goods “no matter what trade Since January 1, 2019, goods purchased through
method, any region, enterprise, unit or individual e-commerce platforms within the threshold
import.” applicable to each purchaser (RMB 5,000
(US$722.4) for individual purchase and RMB
The 1994 policy impacted the 20 specified kinds 26,000 (US$3,756.5) for cumulative annual
of commodities (not including its key parts), in purchase are exempt from import duty and a 30
5 AMCHAM SOUTH CHINA
China Reinstates
Import Tax Reduction
and Exemption for 20
Commodities
By Dorcas Wong, China Briefing, Dezan Shira & Associates
From August 5, 2020, China has reinstated addition to other key types commodities, such as
its tax reduction and exemption policy for machinery, equipment, construction materials
20 commodities, meaning importers can now special vehicles, office supplies, and much more.
enjoy tariff exemptions and import-tax related This was originally introduced so that China
deductions where applicable. This is according could build up its own manufacture and supply of
to the Announcement about Stopping Tax these mass-produced technology and household
Reduction & Exemption for 20 Commodities, goods. However, as these items have now become
jointly released by the Ministry of Finance, the ubiquitous in China’s domestic markets, the
General Administration of Customs, and State continuation of this policy was no longer deemed
Administration of Taxation earlier this month. to have a significant impact on the relevant
industries.
In short, the announcement will mean that
importers of the stipulated commodities will In practice, this will mean that consumers and
benefit from preferential tax policies that businesses importing these commodities can
otherwise apply to goods, trade methods, and benefit from the applicable tax reductions and
enterprises of their type. exemptions.
Here we explain some of the key details For example, under China’s adjusted parcel tax
surrounding this policy reinstatement. scheme, items brought back to China in person
Restarting preferential import policies for 20 are subject to tax-free threshold – capped at
commodities RMB 5,000 (US$722.4) for Chinese nationals
and RMB 2,000 (US$289) for foreign nationals.
Beginning August 5, 20 types of electronic Within this threshold, the item is tax-free if it is
appliances, household consumer items, and food deemed to be for self-use.
products will be subject to tax exemptions that are
otherwise applicable to their product type, trade Ordinarily, cigarettes, alcohol, and these 20
method, region, or enterprise type. categories of items listed in the notice are
excluded from the exemption. However, now
This is a stark reversal of the 1994 policy Second with the new announcement, the stipulated 20
Step of Clearing up Tariffs and Import Link commodities can enjoy this tax exemption and
Tax Reduction and Exemption (Guo Fa [ 1994] also benefit from the tax exemptions within this
No. 64 ), which prevented the application of tax threshold.
exemptions and tax reduction policies on a whole
range of imported goods “no matter what trade Since January 1, 2019, goods purchased through
method, any region, enterprise, unit or individual e-commerce platforms within the threshold
import.” applicable to each purchaser (RMB 5,000
(US$722.4) for individual purchase and RMB
The 1994 policy impacted the 20 specified kinds 26,000 (US$3,756.5) for cumulative annual
of commodities (not including its key parts), in purchase are exempt from import duty and a 30
5 AMCHAM SOUTH CHINA
