China Clarifies New Tax Policy Exemptions for Shipping Companies, says FMC
The Federal Maritime Commission released " an unofficial interpretation" of a Chinese document meant to clarify the effect of value added tax (VAT) policies on shipping companies. According to the interpretation, "the China Ministry of Finance (MOF) and the State…
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Administration of Taxation (SAT) have now jointly agreed to exempt shipping transportation from their recently implemented VAT law." The clarification "removes the unequal tax treatment of foreign shipping companies," it said. The Chinese document (here) revises the VAT rules so that freight forwarders can again deduct international freight from their taxable income, said the FMC translation. "The FMC and State Department are continuing to consult with Chinese officials and industry stakeholders to understand the provisions of the Chinese language circular," said the FMC. Freight charges recently said to be subject to a new 6 percent tax after the expansion of China VAT raised red flags at the FMC and among shipping companies (see 13080111).