China 2014 Provisional Tariffs on Imported Printing Equipment: CTP Rises to 5%, 20 Codes Unchanged

Import tariffs directly influence equipment investment in the printing and flexible packaging sectors. In late 2013, China's State Council Tariff Commission released the 2014 Tariff Implementation Plan, effective January 1, 2014. Under the plan, provisional tariff rates for imported printing equipment in 2014 showed no clear change from 2013.

Issued at the end of 2013 and taking effect on January 1, 2014, the plan raised a key question for the printing community: what changed in import and export tariff rates? The industry's main concern was state preferential treatment for printing equipment trade. A review of the printing equipment section of the 2014 Tariff Implementation Plan (see attached table) shows only minor adjustments to provisional import rates that year. Details follow.

First, the substantive shift in 2014 provisional rates for imported printing equipment, compared with 2013, was an increase for computer-to-plate (CTP) equipment from 3% to 5%.

Second, apart from CTP equipment, the commodity names, number of tariff codes (20), and provisional rates all remained identical to those in 2013.

Third, in four places, commodity names had individual wording changes (marked in bold in the attached table), without altering the substantive meaning of the tariff headings (commodity names).

In addition, several points should be noted to understand these rates:

1. A provisional tariff rate is a tool for adjusting imports and exports and generally serves as a preferential policy encouraging trade; it is set once a year and remains valid for one year.
2. Import tariff rates include the general rate, most-favored-nation rate, agreement rate, provisional rate, and preferential rate, among others. The applicable principle is to use whichever rate is lower; generally, the provisional rate is the lower option.
3. The printing equipment and accessories listed under provisional rates are needed by the printing industry, and the import tariff rates are not particularly high; for offset presses, for example, the rate is only 7%. Some mistakenly assume that importing an offset press requires paying just 7% (the provisional rate), which is incorrect. In reality, the taxes due on imported equipment are several times higher than the provisional rate. For instance, for an offset press valued at USD 1 million with a 7% provisional rate, the mistaken view is that 100 × 1.07 = USD 1.07 million is enough; the actual one-time payment by the purchasing enterprise is 100 × 1.17 × 1.07 = USD 1.2519 million.

From this, buying a USD 1 million offset press does not involve only USD 70,000 in tax but USD 251,900, equal to one quarter of the machine price. Although the 17% value-added tax (referred to by customs as the import-link adjustment tax) can be deducted, large factories find deduction easier, while small factories face a longer deduction period; businesses with weaker economic performance still hesitate over this.

Source: China Packaging Network (pack.cn). Original article: http://news.pack.cn/show-361824.html