China: The tariff law of the People's Republic of China
Date of publication: May 6th, 2024
Don't use just a <b> tag for a heading, but an actual <section><title> element.
Body of the article.
The Standing Committee of the 14th National People's Congress in China passed the Tariff Law at its 9th meeting on April 26, 2024. The law, which takes effect on December 1, 2024, includes seven chapters aimed to maintain the stability of the current tariff system and the overall tax burden while improving the system and policies. The law addresses general provisions, tax items and rates, tax payable, incentives and special circumstances, tariff collection, management, legal responsibilities, and supplementary provisions. It’s highlighted that the new law embodies the legal principle of taxation and will strengthen the system for managing imports and exports, standardizing tariff collection, and protecting taxpayers' rights. It is significant for China's high-level international openness and creating a favourable business environment. With this law, China has now legislated for 13 of the 18 tax categories, advancing its tax legislation and contributing to the rule of law and tax environment optimization, which is crucial for the modernization of national governance.
Differences between the new and old tariff laws may include revisions in tariff rates, the introduction of new tariff measures, changes in the classification of goods, or updates to the processes for assessing and collecting tariffs. The new law explicitly grants China the legal right to impose retaliatory tariffs on countries that violate trade agreements or take unfair trade measures. This strengthens China's position in potential trade disputes. Previously, many tariff-related policies existed through regulations and pronouncements. The new law consolidates these into a formal legal framework, making them more transparent and enforceable.
The law reflects China's growing assertiveness in trade relations. It signals a willingness to use tariffs more strategically to protect its economic interests.
What does the tariff law include?
The Tariff Law of the People's Republic of China consists of 7 chapters and 72 articles. Here is a summary of each chapter's contents:
Chapter 1
: General Provisions (Articles 1-8)
- Establishes the purpose and legal basis for the tariff law.
- Defines the roles and responsibilities of customs, taxpayers, withholding agents, and others involved in the import and export of goods.
- Introduces the Tariff Commission of the State Council and its duties.
- Emphasizes confidentiality requirements for customs staff.
Chapter 2
: Tax Items and Tax Rates (Articles 9-22)- Details the structure of tariff items and tax rates, including most-favoured-nation tax rates, agreement tax rates, preferential tax rates, general tax rates, and temporary tax rates.
- Explains the application of tariff rates based on rules of origin.
- Describes the process for adjusting tariff rates and the application of special tax rates under certain conditions.
Chapter 3
: Tax Payable (Articles 23-31)- Describes the methods of tariff levy (ad valorem, quantity-specific, or compound) and how the tax payable is calculated.
- Defines the taxable price for imported and exported goods and outlines the adjustments and exclusions to be considered.
- Provides methods for estimating the taxable price when the transaction price cannot be determined.
Chapter 4
: Tax Preferences and Special Circumstances Tariff Collection (Articles 32-40)- Lists goods and items exempt from tariffs and those subject to reduced tariffs.
- Discusses special preferential tariff policies and the procedures for tax exemption and reduction.
- Addresses the treatment of bonded goods and temporary imports and exports.
Chapter 5
: Collection Management (Articles 41-61)- Describes the collection management model and the responsibilities of taxpayers and withholding agents.
- Outlines the procedures for tax payment, including deadlines, deferrals, and penalties for late payment.
- Discusses enforcement measures, tax confirmation, tax recovery, and refunds.
- Addresses the use of information technology in collection management and the handling of foreign currency transactions.
Chapter 6
: Legal Liability (Articles 62-68)- Specifies penalties for various violations of the tariff law.
- Provides recourse for taxpayers and withholding agents who disagree with customs decisions.
- Addresses legal consequences for customs officials who abuse their power or leak confidential information.
Chapter 7
: Supplementary Provisions (Articles 69-72)- Clarifies the provisions of tariff matters in the Hainan Free Trade Port, customs duty collection and management.
What are the changes implicated for global trade compliance professionals?
These changes could affect global trade compliance professionals in several ways:
- Compliance requirements: New regulations may require professionals to update their knowledge and practices to ensure compliance with the latest tariff law.
- Customs declarations: Adjustments in the classification of goods may necessitate changes to customs declarations and paperwork.
- Duty rates: Changes in duty rates could impact the cost of imports/exports and necessitate a reassessment of supply chain strategies.
- Trade remedies: If new trade remedies such as anti-dumping duties, countervailing duties, or safeguards are introduced, compliance professionals would need to navigate additional complexity.
- Risk management: With new laws, there may be a greater emphasis on compliance verification and audits, which would require professionals to be more diligent in their risk management practices.
- Training and education: Professionals may need to seek additional training or education to familiarize themselves with the new law's requirements and ensure proper implementation within their organizations.
More details can be found here.
For more information on how ONESOURCE™ Global Trade solutions can assist you in adopting our Global Trade Content, please contact your Account Manager or Client Services Manager.