Six Percent Tax on Freight Payable in China Comes Into Effect
Freight charges payable in China are now subject to a new six percent tax, after expansion of China’s Value Added Tax (VAT) on Aug. 1. According to a news advisory by U.S.-based global logistics service provider BDP (here), industry can expect an “application of 6 percent for air and ocean export freight shipments where freight costs are paid in China.” However, trucking and warehousing rates will remain unaffected, BDP said.
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In response to the expansion of the VAT program by the Chinese State Administration of Taxation, transport companies like OOCL have released bulletins regarding their compliance to the expanded program. In a July 24 bulletin (here), OOCL said an “additional 6 percent VAT and associated surtaxes will be levied on top of the freight and surcharges payable at China” as of Aug. 1. The British International Freight Association (BIFA) said (here) that “there is a great deal of uncertainty about the application of the new rules,” and some carriers were still seeking clarification with the Ministry of Finance and State Administration of Tax.