CHINA has lowered its value added tax (VAT) on forwarders and agents engaged in international shipping business, effectively exempting most foreign carriers.
From January 1, State Administration of Taxation said the tax bases for China-based freight forwarders and agents will be revenues less freight charges paid to international carriers rather than having their tax based on revenues alone without such a deduction.
The new policy is expected to benefit carriers in 91 countries, including the US, the UK and Japan, which have signed tax treaties with China to waive VAT or the business tax, according to the accounting firm KPMG.
The move follows months of complaints at home and abroad, and was welcomed by foreign lines as well as Chinese freight forwarders and shippers, according to industry and accounting officials, reports Lloyd's List.
Foreign carriers were perceived to have lost out in China's shift from the business tax to VAT, which took effect nationwide on August 1, having needed to establish subsidiaries in China to send out bills related to Chinese trade or charge via agents.
Before the shift in August, those subsidiaries were liable to a five per cent business tax calculated on their net revenues - sale amounts to Chinese shippers, minus freight charges paid to parent companies - and effectively paid little tax.
US Federal Maritime Commissioner William Doyle pointed out that the VAT issue was discussed in October in Chicago at a bilateral maritime consultation meeting that the US and China hold each year.
WORLD SHIPPING
27 December 2013 - 23:10
China eases reforms to exempt foreign carriers from value added tax
CHINA has lowered its value added tax (VAT) on forwarders and agents engaged in international shipping business, effectively exempting most foreign carriers.
WORLD SHIPPING
27 December 2013 - 23:10
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