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Notice on Policies for Reform and Adjustment of Import Tax (Summary) - 1995

(Guo Fa No. 34 1995, Issued by the State Council on December 26, 1995)



The People's Government of each Province, Autonomous Region, and Municipality Directly under the Central Government, Ministries, Commissions and Departments under the State Council:

A series of preferential policies on import duties have been formulated since the Third Plenary Session of the 11th CPC National Congress in order to further the opening to the outside and promote the development of the national economy. These have played an important role in expanding foreign trade, attracting foreign investment and introducing advanced technologies. However, with the deepening of reform and opening to the outside and the gradual establishment of the socialist market economic system, the contradictions between those policies and international general practices as well as the principle of fair competition in the market economy have become more and more obvious. In recent years, the State Council has streamlined and adjusted some of the regulations regarding import duty reductions and exemptions, lowering the general level of import duties from 42% to 35.9%. Generally speaking, however, the problem of high tax rates, too many reductions and exemptions and a low tax base is still very serious. Various kinds of tax reductions and exemptions have given rise to unfair competitions among different regions and different enterprises, which is harmful both to the conversion of operational structures by State-owned enterprises and to the coordinated economic development among different regions.

It is imperative to accelerate the reform and adjustment of import duty policies. We must further lower the general level of import tariff, cancel excessive unfair import duty reduction and exemption regulations. We must establish unified, standard, fair, reasonable import duty policies based on the demands of socialist market economy and international general practice so as to participate in international competitions and international economic cooperation in a more open manner and to promote the development of the national economy. We hereby notify you of the relevant issues as follows:

I. Greatly Decrease Our Country's General Level of Import Tariff


Based on the demands of the development of China's national economy and the market, in consideration of the effect on the Central Government's revenue and the bearing capabilities of the country's industries, gradually lower the general level of import tariff of the country to the average level of that of the developing countries under the precondition that it will be favorable to the adjustment of the industrial structure and the rationalization of the tariff structure. Therefore, commencing April 1, 1996, the general level of the import tariff of the country shall be lowered to 23%. The detailed plan for lowering the tariff shall be proposed by Customs Tariff Commission under the State Council, and upon the approval by the State Council, shall be promulgated publicly by the General Administration of Customs for implementation.

II.Impose Tariffs and Import Circulation Taxes on Imported Equipment and Raw Materials at Rates Required by Law

    (1) Commencing April 1, 1996, tariff and import circulation tax shall be imposed at official rates on the equipment and raw materials imported by the newly approved foreign investment enterprises (including Sino-foreign equity joint ventures, cooperative joint ventures and foreign-owned enterprises) within the total investment. Those foreign investment enterprises that have already been approved and established prior to the date thereof shall continue to enjoy tariff and import circulation tax reduction and exemption within the stipulated grace period. For the import of equipment and raw materials for projects with a total investment over US$30,000,000 (including US$30,000,000, but excluding additional investment made after the date of issuance of this notice), before December 31, 1997, the original regulations shall apply. For the import of equipment and raw materials by projects with a total investment below US$30,000,000, before December 31, 1996, the original regulations shall continue to apply. If the given grace period is not long enough, application to extend the period may be submitted through MOFTEC, and may be extended upon review and comment by the Ministry of Finance in conjunction with MOFTEC, the Customs Tariff Commission under the State Council, the State Planning Commission, the State Trade and Economic Commission, the State Taxation Administration and the General Administration of Customs, to the State Council, and upon the approval by the State Council. 

    (2) Commencing April 1, 1996, tariff and import circulation tax shall be imposed at official rates on the equipment imported by newly approved technological renovation projects. The technological renovation projects which have already been listed under the State or provincial plan for commencement before the date thereof can continue enjoying the treatment of tax reduction and exemption for the import of equipment during the given grace period, that is, the duties imposed on the equipment imported before December 31, 1997 by energy, communications and metallurgy projects with a total investment above RMB¥50,000,000 (including RMB¥50,000,000, but excluding additional investment made after the date of the issuance of this Notice), or light industry, textile and electronic projects with a total investment above RMB¥30,000,000 (including RMB¥30,000,000, but excluding additional investment made after the date of issuance of this Notice), shall be cut by half; the duties imposed on the equipment imported before December 31, 1996 by the two kinds of projects as mentioned above with a total investment below RMB¥50,000,000 and RMB¥30,000,000 separately, shall be cut by half. If the given grace period is not long enough, application to extend the period may be submitted through MOFTEC, and may be extended upon review and comment by the Ministry of Finance in conjunction with MOFTEC, the Customs Tariff Commission under the State Council, the State Planning Commission, the State Trade and Economic Commission, the State Taxation Administration and the General Administration of Customs, to the State Council, and upon the approval by the State Council. 

    (3) Commencing April 1, 1996, tariff and import circulation tax shall be levied at rates required by the law on equipment imported for major construction projects, which are newly approved by the State Council. Prior to the date thereof, the original regulations shall be applied to equipment imported for major construction projects already approved by the State Council.

    (4) Commencing April 1, 1996, tariff and import circulation tax shall be levied at rates required by the law on various materials imported by the country's specially designated area (including SEZs, economic and technological development zones, new and high technology industrial development zones, coastal open cities, coastal economic open zones, border open cities, border economic cooperation zones, open cities along the Yangtze River and inland open cities enjoying the same preferential policies as coastal open cities, national tourism and holiday zones, Shanghai Pudong New Area and other open areas). With regards to the materials imported for self-use by SEZs and Shanghai Pudong New Area (not including foreign investment enterprises), according to the rates approved by the State, such method shall be adopted where tariff and import circulation tax shall be first levied, then returned for a transition of 5 years (1996-2000), reduced year by year. Details of the method shall be worked out by the Ministry of Finance in conjunction with the Customs Tariff Commission under the State Council, the State Planning Commission, the State Economic and Trade Commission, the State Council Office for Special Economic Zones, the State Taxation Administration and the General Administration of Customs, and be implemented upon the approval of the State Council. Regulations for SEZs and Shanghai Pudong New Area, as a reference, shall be applied to the Suzhou Industrial Park established according to the agreement executed by the Chinese and Singapore governments. Relevant policies regarding taxation in bonded areas as approved by the State Council shall continue to be applied to the Yangpu Economic Development Zone in Hainan.

    (5) Commencing from April 1, 1996, the regulations regarding tariff and import circulation tax exemptions and reductions on the goods imported under the arrangements for barter trade and economic and technological cooperation with neighboring countries shall be cancelled. Tax preferential policies regarding bilateral trade among border residents and small volume border trade shall be promulgated separately.

    (6) Commencing April 1, 1996, the regulations regarding tariff and import circulation tax exemptions and reductions on the processing equipment imported for processing and compensation trade projects, shall be cancelled.

III. According to international general practice and in light of China's actual circumstances, some regulations regarding tariff exemptions and reductions shall be adjusted or maintained.

    (1) According to international conventions, with reference to international general practice, the regulations regarding tariff and import circulation tax exemptions and reductions for the import of goods for scientific and educational purposes and for the disabled, goods used by foreign embassies and consulates and relevant international organizations and their personnel in China and goods donated by foreign governments and international organizations shall be kept, with appropriate adjustments to be made.

    (2) The regulations already approved by the State Council regarding the linking of rates of localization and differential duties for automobiles and video cameras shall be kept during the ninth Five-Year Plan Period.

    (3) The regulations regarding tariff and import circulation tax exemptions and reductions on the equipment and materials imported for offshore oil or natural gas exploration and exploitation shall be kept during the ninth Five-Year Plan Period, with appropriate adjustments to be made. Subject to the approval of the State Council, equipment and materials used for the exploration and exploitation of mainland oil or natural gas in specific areas, which can not be manufactured locally and thus have to be imported, shall be exempted from tariff and import circulation tax.

    (4) The regulations regarding the reductions of import circulation VAT for the import of airplanes by the civil aviation industry shall continue to be applied during the ninth Five Year Plan Period.

    (5) The regulations regarding the exemption of import duties for personal goods by personnel of permanent Chinese diplomatic compounds, Chinese students studying abroad, visiting scholars, personnel for overseas labor services, personnel for overseas aid program and seamen on coastal shipping shall remain unchanged for the time being; while the unified regulations of the Customs shall be applied as of April 1, 1996 to the import of personal goods by other people.

    (6) Duty-free shops at exit ports will be kept. Duty-free shops at entry ports will be kept prior to the amendments to the Measures of the Customs of the People's Republic of China on the Custody of Import and Export Mails and the Administrative Regulations of the Customs of the People's Republic of China on the Luggage of Passengers Entering or Leaving China.

    (7) Stipulations regarding import duty exemptions and reductions under Articles 27, 28, 29 and 30 of the Regulations of the People's Republic of China Regarding Import and Export Duties shall continue to be applied.