Import Duty Policies for Key Equipment and Products

In 2020 the Ministry of Finance (MOF), jointly with the Ministry of Industry and Information Technology (MIIT), the General Administration of Customs of China (GACC), the State Administration of Taxation (SAT) and the National Energy Administration (NEA) issued the Circular [2020] No. 2 on the Administrative Measures for Import Duty Policies on Major Technical Equipment.

The Circular aimed to improve the competitiveness and the innovation capabilities of Chinese companies and the development of equipment manufacturing through preferential import duty policies applicable to imported products and goods included in the Catalog of Key Technical Equipment and Products Supported by the State for Development and the Catalog of Imported Key Components, Parts, and Raw Materials of Major Technical Equipment and Products. In addition, for major technical equipment and products that could be produced in China, the MIIT, jointly with MOF, GACC, SAT, and NEA, formulated the Catalog of Imported Major Technical Equipment and Products Not Subject to Duty Exemption.

The preferential import duty policies consist of the exemption from customs duties and/or the waive of the import VAT. The relevant authorities shall recognize companies eligible for the exemption, and their qualification shall be reviewed periodically.

In July 2020, the five authorities issued the Circular [2020] No. 118 on the Implementing Rules for the Administrative Measures for the Import Duty Policy on Key Technical Equipment, which entered into force in August 2020. Circular No. 118 lists the requirements to be met by a company in order to be qualified to enjoy the preferential import duty policies when importing key technical equipment, including:

1. a strong manufacturing and R&D capability.

2. a good credit score.

3. the ownership of core technology and intellectual property and

4. the key technical equipment and products are among the items in the Catalog of Key Technical Equipment and Products Supported by the State for Development.

The Circular also applies to nuclear power project owners undertaking key technical equipment-backed projects.

In light of the changes in domestic and foreign situations, the MIIT, jointly with the MOF, GACC, SAT, and NEA, issued in December 2021 the Circular [2021] No. 198 on Adjusting the Relevant Catalogues of Import Tax Policies of Major Technical Equipment. The revised three Catalogues (2021 Edition) will be applicable from January 1, 2022.

The technical equipment and products supported by the State include, among others, large scale clean and efficient power generation equipment, high-voltage transmission and transformation equipment, large-scale petroleum, petrochemical, coal, metallurgical, mining equipment, high-speed CNC equipment.