New Transport Tax in China Effective August 1st

Please note that beginning August 1st, 2013 the Ministry of Finance and the State Administration of Taxation of China have released a new tax regulation for the transportation industry and other selected service industries on a nationwide basis.

The tax will be levied on all charges remitted to carriers in China, including ocean freight and all surcharges. The tax does not apply when bill of lading charges are prepaid outside of China. For example, the Chinese government will not assess the tax when ocean freight and/or accessorial charges are prepaid in the U.S. or Canada.

The new VAT will be applied on all import and export cargo to/from China, and the tax will impact all Trade lanes – not just the Transpacific. This may lead to increase of rates for the whole transport sector in China related to inbound, outbound and transit cargo.

Ocean freight carriers have begun issuing  notices advising customers that as international transport agencies in China and as the general taxpayer of the logistics auxiliary industry, they are therefore subject to the 6% VAT from the Chinese government. At the start of peak season shipping and coupled with general rate increases from ocean freight carriers, this will be a huge burden on international shippers.

Please also note the new VAT is not a carrier surcharge. It is a government tax and, as such will be collected on all applicable tariff-rated and contracted cargo. RCL Agencies  will keep you advised regarding any changes to this tax program in China.