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Here's what you need to know about China's import tax

22 June 2023 4 Mins Read

Singapore and China have a long-standing relationship, having recently decided to expand cooperation across six areas, from food safety to arts and biodiversity conservation. In the trading scene, both countries are welcoming talks to upgrade the existing China-Singapore Free Trade Agreement (CSFTA) to enhance market access with, among other, reduced tariffs.

Evidently, this means positive news for Singapore businesses looking to ship to China. However, as with any global venture, understanding the duty and taxes involved is key to a smooth customs experience. Below, we outline what you need to know about China’s import fees before you ship your goods out from Singapore to the country.

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How much is China’s import tax?

1. China customs duty rates

China calculates its customs duty based on ad valorem rates or the number of goods shipped. Here are the different categories:

General duty rates: These are duties applied on products between two countries not covered under any agreements. Since Singapore has existing bilateral ties with China, general duty rates are typically not levied on Singaporean goods entering China.
Most Favoured Nation (MFN) duty rates: Goods imported from World Trade Organisation (WTO) member countries enjoy MFN duty rates unless a preferential trade agreement exists which will precede the MFN. The duty also applies to goods from countries with bilateral trade agreements providing MFN treatment with China and goods originating from China. China has lowered import tariffs on 62 more informational technology products, with a 7.4% overall duty rate across all categories.
Conventional duty rates: These are levied on goods shipped to China from countries with regional trade agreements offering preferential import tax rates, such as the CSFTA.
Special preferential duty rates: These are lower than MFN or conventional duty rates and are applied to imported goods originating from countries with trade agreements containing special preferential duty provisions with China.
Tariff Rate Quota (TRQ) duty rates: Goods imported within a TRQ quota receive a lower customs tariff rate, while those above the quota are charged higher rates. This is applicable to eight categories of goods: wheat, corn, rice, sugar, wool, cotton and fertiliser.
Temporary duty rates: These are periodically implemented by China to boost imports and meet rising demands.

2. Value–Added Tax (VAT) rates

Similar to Singapore's Goods and Services Tax (GST), China imposes a VAT on imports.

General taxpayers, who have annual taxable income above ¥5 million, pay between 6% and 13% VAT. Small-scale taxpayers with an annual taxable income worth ¥5 million and below pay 3% of VAT.

Here’s how to calculate VAT when tabulating customs charges to pay when shipping goods from Singapore to China:

General taxpayer VAT	Small-scale taxpayer VAT
VAT Payable = (Sales* x VAT Rate) - Input VAT** * “Sales” refers to income received by the taxpayer excluding the VAT incurred [Sales Including Output VAT / (1 + VAT Rate)] ** Input VAT refers to VAT paid by the taxpayer when goods were purchased.	VAT Payable = Sales* x VAT Rate * “Sales” refer to income received by taxpayer excluding VAT incurred [Sales Including VAT / (1 + VAT Rate)]

General taxpayer VAT

Small-scale taxpayer VAT

VAT Payable = (Sales* x VAT Rate) - Input VAT**

* “Sales” refers to income received by the taxpayer excluding the VAT incurred [Sales Including Output VAT / (1 + VAT Rate)]

** Input VAT refers to VAT paid by the taxpayer when goods were purchased.

VAT Payable = Sales* x VAT Rate

* “Sales” refer to income received by taxpayer excluding VAT incurred [Sales Including VAT / (1 + VAT Rate)]

3. Consumption tax

Consumption tax is imposed on manufacturers and importers of taxable products, including harmful items like tobacco and alcohol, luxury items like jewellery and cosmetics, and automobiles. The tax rate varies depending on the product type entering China and can be calculated using any of these three methods:

Ad valorem	Consumption Tax Payable = Taxable Sales Amount × Tax Rate
Quantity-based	Consumption Tax Payable = Taxable Sales Quantity × Tax Amount per Unit
Compound tax	Consumption Tax Payable = Taxable Sales Amount × Tax Rate + Taxable Sales Quantity × Tax Amount per Unit

4. Cross-border e-commerce import tax:

Goods purchased from merchants registered within China's cross-border e-commerce network or from overseas merchants will have to pay customs duties, VAT and consumption tax.

However, single shipments worth below ¥2,000, with an annual cumulative value of less than ¥20,000, are exempt from customs duty. These will still be subject to VAT and consumption tax totalling 70% of the normal tax levied via general trade.

Clear China import fees with ease when you choose DHL Express

Navigating import fees in China can be a challenge for businesses in Singapore looking to tap into the thriving Chinese e-commerce market. However, this doesn't have to be the case when businesses choose a reliable international logistics partner. A strong global logistics provider like DHL Express can help simplify the import and export process, enabling companies to overcome potential obstacles and focus on seizing the numerous opportunities that the Chinese market offers.

When you ship with us, you’ll stay up to date on the latest changes in China’s import taxes and acquire a more accurate estimation of fees to pay when you use our intuitive digital tools such as MyDHL+. In addition, your customers in China will benefit from timely deliveries, even urgent and time-critical shipments, when we take charge of the last mile. To find out more, create a DHL Express business account today.