Tax Newsflash

On 20 December 2023, the Tariff Commission of China's State Council issued the Tariff Adjustment Plan for 2024 (2024 Tariff Adjustment Plan), which adjusted the import and export tariffs and tariff codes of certain goods beginning 1 January 2024. The annual tariff plan aims to fully implement national policies and to perform the tariff function of coordinating domestic and international resources and markets.

Import interim duty rates on 1,010 items

One of the prominent points of the 2024 Tariff Adjustment Plan is the application of interim import duty rates (IDRs) on certain goods that are lower than the Most Favored Nation (MFN) duty rates. Pursuant to the below graph, over 95% of goods subject to IDRs fall within the food, medicine and consumer goods, chemical raw materials and products, equipment and key spare parts, and mineral products industries^[1].

Compared with 2023, 26 additional items are subject to import IDRs while 36 are no longer subject to import IDRs under the 2024 Tariff Adjustment Plan. Further, IDRs for four items are reduced to 0%, and the rates on two items are increased, as follows:

• To reduce the cost of medication, import IDRs are added for certain anti-cancer drug raw materials, injections, and other similar products. Taking the tariff code 2844.4390 (Yttrium [90] Microsphere Injection) as an example, the import IDR in 2024 is 0%, which is less than the MFN duty rate of 5%.
• To reduce the cost of new energy vehicles industries, import IDRs are added for certain raw materials, including lithium carbonate, lithium chloride, and cobalt carbonate. Taking the tariff code 2836.9100 (lithium carbonate) as an example, the import IDR in 2024 is 0%, which is less than the MFN duty rate of 5%.
• To conform with changing domestic supply and demand, import IDRs are removed for goods such as ethylene, propylene, LCD glass substrates below the sixth generation, some coal products, artificial graphite, aircraft frequency flashing lights, and warning components. Taking the artificial graphite with tariff code 3801.1000 as an example, import IDRs for 2023 is 3% and taxed at the MFN duty rate of 6.5% in 2024, as the IDR for it is no longer applicable in 2024.

Preferential duty rates on imported goods originating from 30 jurisdictions

Imported goods originating from 30 jurisdictions are subject to preferential duty rates in 2024, under either 20 free trade agreements (FTAs) or preferential trade arrangements. Among them are:

• Further reduced preferential tariff rates could be applied in 2024 under the FTAs/Regional Comprehensive Economic Partnership between China and related countries, including Australia, Cambodia, Costa Rica, Iceland, Mauritius, New Zealand, Peru, Pakistan, South Korea, and Switzerland.
• FTAs between China and countries including ASEAN, Chile, Singapore, Georgia, Early Harvest in the FTA with Nicaragua, the Closer Economic Partnership Arrangement between the Mainland and Hong Kong SAR, as well as Macau SAR, have completed tax reductions and continue to implement preferential duty rates.
• The Asia Pacific Trade Agreement will continue its implementation.
• The Economic Cooperation Framework Agreement (ECFA) has completed tax reductions and will continue to implement preferential duty rates, except for goods covered by the Announcement of the Tariff Commission of China’s State Council on Suspending Tariff Concessions for Some Products under the ECFA (Shuiweihui [2023] No. 9).
• China also entered into FTAs with Ecuador and Serbia in 2023, which will be effective after the completion of relevant legal procedures.

Other major updates

A total of 107 items are subject to export duty in 2024, among which 68 are subject to export IDRs that are normally lower than their export duty rates. Compared with 2023, the only newly added item with the export IDR of 0% is unwrought, unalloyed aluminum, where the aluminum content is no less than 99.995% by weight (tariff code 7601.1010).

In addition, domestic subheadings of tariff codes are adjusted, resulting in a total of 8,957 items. Taking high-end steel as an example, relevant subheadings are added to products under heading 7208 based on the yield strength index of the product, which is of particular significance for improving the import and export data statistics and analysis of high-strength medium plates.

Further comments

Internal review of customs management

Based on the 2024 Tariff Adjustment Plan, companies should review their internal customs management and make necessary updates according to the 2024 Tariff Adjustment Plan in a timely manner. For example, companies may need to review their tariff classifications to confirm whether the relevant goods are or would be declared under the correct tariff codes to enjoy reduced duty rates.

Provision of tariff policy feedback

Companies that would like to provide feedback on the tariff policies are encouraged to actively communicate their needs and concerns with relevant government authorities or industry associations, in order to seek reasonable policy support, to reduce production and operating costs, and to promote the development of related industries.

Moreover, during the industrial survey conducted by customs or industrial authorities, if any policy adjustments (such as cancellation of IDRs) may have potential adverse effects on the industry, companies may provide evidence and suggestions to the authorities. Professional support may be sought, where necessary.

Analyze FTAs’ impacts on supply chains

Companies should pay attention to the policy trends of FTAs or preferential trade arrangements and analyze their impact on cross-border supply chains. They should consider the origin rules under specific FTAs to conduct reasonable commercial planning for the localized manufacturing. They should also focus on the impact of regional value content, micro content, micro processing, direct transportation rules, and green trade barriers such as carbon tariffs and green technology standards.

^[1] Distribution data is sourced from IDR list of 2024 Tariff Adjustment Plan.

Authors

Dolly Zhang
Partner
Tel：+86 21 6141 1113
Email：dozhang@deloitte.com.cn

Steven Zhu
Senior Manager
Tel：+86 23 8823 1992
Email：stezhu@deloitte.com.cn

For more information, please contact:

Indirect Tax
National Leader
Lily Li
Partner
Tel：+86 21 6141 1099
Email：lilyxcli@deloitte.com.cn

Deputy National Leader
Shu Tian
Partner
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Email：shutian@deloitte.com.cn

Northern China
Betty Mu
Director
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Email：bemu@deloitte.com.cn

Eastern China
Li Qun Gao
Partner
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Southern China
Janet Zhang
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Email：jazhang@deloitte.com.cn

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Frank Tang
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Email：ftang@deloitte.com.cn