China’s 2011 Tariff Update: Import Duty and Interim Rate Changes for Printing Equipment

On December 14, 2010, China’s Ministry of Finance released the 2011 Import and Export Tariff of the People’s Republic of China (the “new Tariff”), setting January 1, 2011 as its effective date. The market is asking what the updated schedule changes and what preferential measures the state will introduce. For the printing sector, the key question is which policies will apply to imports and exports of printing equipment. A review of the 2011 Tariff highlights several important areas.

Focus One: More tariff lines, lower overall duties

The 2011 Tariff contains 7,977 tariff lines, 54 more than the 2010 version. This brings the schedule closer to actual trade flows and makes the import-export structure more rational.

The new Tariff also shows that China’s overall import tariff level in 2011 is 9.8%. This signals that, under the tariff reduction commitment made when China joined the WTO in 2001, after nine years of work China has now fully met its WTO tariff concession obligations ahead of schedule. The overall tariff level has fallen from 15.3% at WTO accession to 9.8% today, demonstrating that China honors its commitments.

Focus Two: Interim duty rates used to adjust the trade structure

In response to the continued impact of the post-financial crisis, China applied lower interim duty rates to more than 600 categories of goods in 2011. The goals include encouraging independent innovation, promoting high-tech industries and advanced manufacturing, advancing industrial upgrading, supporting energy and resource conservation and ecological protection, and responding to changes in domestic and international supply, demand, and market prices. Among these goods, 18 types of printing equipment and parts continued to benefit from lower interim duty rates.

Focus Three: Specific changes in import duties on printing equipment

The points above cover the macro picture. For the printing industry, the real concern is how the 2011 tariff schedule, tariff lines, and import duties for printing equipment compare with 2010: have import duty rates come down, and in particular, what has changed in the interim duty rates that are revised each year?

A comparison of the new Tariff with the 2010 import and export tariff shows that, for printing equipment, import tariff lines, MFN rates, and export tax rates are basically unchanged. However, interim duty rates for three types of equipment and parts have changed. The details are as follows:

1. There are 18 tariff codes tied to the printing industry under interim duty rates, one more than in 2010. A new interim duty rate applies to tariff code 84439929 for piezoelectric inkjet heads: the MFN import duty rate is 6%, while the interim duty rate is 3%. This supports the growth of inkjet printing.
2. The interim duty rate for tariff code 84423021, computer-to-plate (CTP) machines, has been adjusted from zero duty in 2010 to 3%.
3. For tariff code 84433222, the size specification for “electrostatic photographic printing equipment (laser printers) capable of connecting to a network or automatic data processing equipment” has been changed, with width moving from 60 cm to 32.9 cm. This relaxes import restrictions.

From an objective standpoint, lower interim duty rates have generally been set for major printing equipment and parts. Import duties are not especially high, and the import-stage adjustment tax (17% VAT) can be deducted. Even so, for a folio-size four-color sheet-fed offset press priced at US$1 million, the theoretical cost would be 100×1.07=US$1.07 million (about RMB 7.06 million). In practice, however, the company must first pay 100×1.07×1.17=US$1.2519 million (about RMB 8.30 million) in a lump sum. That is a heavy cash burden, and VAT recovery is slow. As a result, many small and medium-sized printing companies often hesitate.

Focus Four: Which import duty rate applies to imported equipment?

Import duty rates include the general rate, MFN rate, agreement rate, interim duty rate, and preferential rate, among others. The rule is: if imported goods are subject to both an MFN rate and an interim duty rate, the interim duty rate applies. If imported goods are subject to an agreement rate or preferential rate and also an interim duty rate, the lower rate applies. In other words, the lower rate is used. If exported goods are subject to both an export tax rate and an interim duty rate, the interim duty rate applies. Note that interim duty rates are set once a year and are valid only for that year.

(Source: Changjiang Logistics Network)

—This article is reposted from China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-362148.html