The Customs Duty Exemption and Reduction Code Table serves as a crucial classification tool for China's customs administration. It not only facilitates the classification and statistics of duty exemptions and reductions for import/export goods in automated declaration systems and EDI clearance systems but also provides valuable first-hand data for customs tariff databases. Therefore, understanding the classification of duty exemption/reduction categories and their applicable scope is essential for businesses engaged in import and export activities.
I. Classification of Duty Exemption/Reduction Categories
China's customs duty exemption/reduction policies are primarily divided into five major categories:
- Statutory Taxation : Refers to import/export goods taxed according to rates specified by relevant laws and regulations. The code for this category is "101."
- Statutory Duty Exemption : Includes goods exempted under statutory provisions such as gratuitous aid and other legally exempted items.
- Special Duty Exemption : Applies to goods receiving preferential rates based on region, purpose, trade nature, or enterprise type.
- Other Duty Exemptions : Covers import/export goods not falling under statutory taxation or other exemption categories.
- Provisional Tax Rates : Applies to import/export goods subject to internal provisional tax rates, coded as "998."
II. Overview of Duty Exemption/Reduction Codes
The duty exemption/reduction codes consist of three digits, where the first digit represents the category and the last two digits indicate the specific exemption/reduction item within that category.
(1) General Taxation for Import/Export Goods
Definition : Goods taxed normally according to China's Customs Law and related regulations.
Code : 101
Applicable Scope : All taxable goods except those qualifying for special exemptions.
(2) Gratuitous Aid Materials
Definition : Includes materials provided as gratuitous aid by foreign governments or organizations.
Code : 201
Applicable Scope : Materials donated gratuitously under bilateral agreements or international organization cooperation.
(3) Other Statutorily Exempted Import/Export Goods
Definition : Goods exempted under laws and regulations other than gratuitous aid.
Code : 299
Applicable Scope : Includes gratuitous compensation materials, non-commercial value advertising items, etc.
(4) Self-use Materials and Export Goods in Special Economic Zones
Definition : Duty-free self-use materials imported and goods exported from special economic zones.
Code : 301
Applicable Scope : For example, self-use materials imported by enterprises in Shenzhen Special Economic Zone.
(5) Self-use Materials in Bonded Zones
Definition : Materials subject to special taxation policies in bonded zones.
Code : 307
Applicable Scope : Equipment and materials imported by enterprises within bonded zones for self-use.
(6) Scientific and Educational Articles Imported by Research Institutions and Schools
Definition : Special items imported to promote scientific research and education.
Code : 401
Applicable Scope : Items imported by universities and research institutions for teaching and research purposes.
(7) Equipment Imported for Enterprise Technological Transformation
Definition : Advanced equipment imported for technological upgrades.
Code : 403
Applicable Scope : Equipment imported by enterprises across various sectors for technological transformation.
(8) Goods Imported for National Major Projects
Definition : Equipment related to major construction projects approved by the State Council.
Code : 406
Applicable Scope : Equipment imports listed in State Council-approved major project catalogs.
(9) Disaster Relief Donation Materials
Definition : Materials donated to disaster-stricken areas in China by foreign organizations and individuals.
Code : 801
Applicable Scope : Disaster relief materials received by the government that meet relevant regulations.
(10) Processing Trade Import Goods
Definition : Includes equipment provided by foreign investors without charge and materials for processing.
Code : 501 and 502
Applicable Scope : Import/export goods under processing trade and compensation trade agreements.
Special categories also include import/export goods for Sino-foreign joint ventures, cooperative enterprises, and wholly foreign-owned enterprises.
III. Exceptions and Special Provisions
When not explicitly covered by laws and regulations, certain import/export goods may be classified under the "999" exception category. Goods approved for special duty exemptions by the State Council receive code "898." These provisions ensure compliance while maintaining flexibility in cross-border trade, thereby promoting international commerce.
In conclusion, a thorough understanding of customs duty exemption/reduction codes and their applicable scope enables businesses to optimize tax obligations while maintaining compliance. Proper application of these codes positively impacts supply chain management, enhances overall business performance, and ensures competitiveness in global trade.
