China (Shanghai) Pilot Free Trade Zone: Import Tax Incentives
Business Regulation and Tax Newsflash
Issue 10 - 15 November 2013
The Ministry of Finance, General Administration of Customs and State Administration of Taxation, jointly issued a circular in October to provide the following preferential policies in respect of imports to/from the China (Shanghai) Pilot Free Trade Zone ("Pilot FTZ"). You may also follow this link to read our unofficial English translation of the circular.
Frontier (Goods flow between overseas and the Pilot FTZ)
Machinery, equipment and other relevant goods imported from overseas by manufacturing enterprises or manufacturing-related service enterprises in the Pilot FTZ are exempt from import taxes. However, such exemption cannot be extended to the following goods:
- Goods imported by consumer service enterprises in the Pilot FTZ; and
- Goods that are specifically excluded from any import tax exemption treatment according to relevant regulations.
Second-tier (Goods flow between the Pilot FTZ and other domestic area)
Import taxes will generally be applied for any goods that were manufactured in the Pilot FTZ and then imported into other areas on Mainland China from the Pilot FTZ. But the relevant enterprise may choose to have the import Customs duty determined by reference to either the value of the finished goods, or to the materials/components comprised in those goods.
- A reduced 5% (instead of a normal 17%) import VAT will be applied to an aircraft with unladen weight of 25 tons or more, if the aircraft was purchased from overseas by an FTZ leasing company (or an FTZ SPV of a domestic leasing company) and then leased to a domestic airline; and
- Exhibition and trading platforms for bonded goods are allowed to be established in areas to be specified.
Unofficial English translations by Deloitte of other significant regulations are provided via the dedicated portal page. You may also follow this link to access the government website for the full text of the regulation above in Chinese.