China's Packaging Machinery Market Research Report - PMMI

12. TARIFFS ON PACKAGING MACHINERY
12.1 Types of taxes and tax rate
In China there are three types of duties for imported goods. Specifically, a Customs
duty, value-added tax, and consumer tax. An itemized list of tax rate is as below
(note: the value-added tax is 17%; packaging machinery does not need to pay the
consumer tax).
Judging from the current situation in China, the rate may remain as low as 17% and
will be reduced in the years to come because of China’s entry of WTO. In addition,
there will be little possibility for the Chinese government to impose higher rate of
tax to protect the less developed domestic manufacturers
12.2 Assessment
(1) Import tax = CIF * Import duty rate
(2) Value-added tax = (CIF + Import tax) * value-added tax rate
(3) Expenses for declaration at Customs and storage after the goods has reached the
port of destination, amounting 1% - 2% of the cost of the goods.
(4) An I&E company is necessary to attend to the importation, because none of the
overseas manufacturers and very few of the domestic users have the right to
import or export directly, according to Chinese laws. The I&E company
purchases the packaging machinery by contracting with a foreign manufacturer
and then sells it to the domestic users. The charge for doing so is 1% - 2% of
cost of the goods. But I&E companies are not responsible for the installation,
testing, or the maintenance. For those overseas manufacturers with sales offices
in China, it must be pointed out that an I&E company is still required to get
involved unless the machinery is made in China.
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