July 2024 / China

On July 2^nd, 2024, the Ministry of Finance (MOF) and four other authorities have jointly released the Circular on Implementing Relevant Tax Policies for the Temporary Entry for Repair on a Trial Basis in the China (Shanghai) Pilot Free Trade Zone (the "Circular"), with effect on the date of release.

The Circular stipulates that, within the special customs supervision areas of the China (Shanghai) Pilot Free Trade Zone (including the Lin-gang Special Area) and from the date of implementation of the Circular, goods temporarily allowed to enter the pilot area from abroad for repair will be subject to bonded measures, and will be exempt from customs duties, import value-added tax (VAT), and consumption tax when re-exported; if such goods are not re-exported and are instead sold domestically, import procedures shall be handled as required, and import duties, import VAT, and consumption tax will be levied based on the actual declaration status of the repaired goods and according to relevant regulations. According to the Circular, this policy only applies to the Yangshan Special Comprehensive Bonded Zone, the Shanghai Pudong Airport Comprehensive Bonded Zone, the Shanghai Waigaoqiao Port Comprehensive Bonded Zone, the Shanghai Waigaoqiao Bonded Area, and other special customs supervision areas within the China (Shanghai) Pilot Free Trade Zone (including the Lin-gang Special Area) approved by the State Council.

On July 12th, 2024, the Ministry of Finance (MOF) and the State Taxation Administration (STA) have jointly released the Announcement on Enterprise Income Tax Policies for the Digital and Intelligent Transformation of Specialized Equipment for Energy Conservation, Water Conservation, Environmental Protection, and Work Safety  (the "Announcement").

The Announcement stipulates that for enterprises' input in the digital and intelligent transformation of specialized equipment incurred between January 1, 2024, and December 31, 2027, the portion not exceeding 50% of the original tax base at the time of purchase of the specialized equipment can be deducted from the enterprise's current year taxes payable at a rate of 10%. If the enterprise's payable taxes for the current year are insufficient for deduction, the excess can be carried forward to subsequent years, with a maximum carry-forward period of five years. Furthermore, the Announcement clarifies that the transformation input eligible for tax incentives refers to the expenditures incurred by enterprises during the digital and intelligent transformation of specialized equipment that contribute to the fixed asset value of the specialized equipment. This excludes value-added tax (VAT) refunds according to relevant regulations and the costs related to transportation, installation, and commissioning of the specialized equipment.

The Customs Tariff Commission of the State Council has recently issued the Announcement on the 15th List of US Goods Granted the Extension of Exclusion from the Additional Tariffs (the "Announcement") on July 23^rd, 2024.

The Announcement specifies that, according to the Announcement of the Customs Tariff Commission of the State Council on the 13th List of US Goods Granted the Extension of Exclusion from the Additional Tariffs, the 13th list of US goods granted the extension of exclusion from the additional tariffs will expire on July 31, 2024. The Customs Tariff Commission of the State Council has decided, as per procedure, to extend the period of exclusion for the relevant goods. Regarding the goods listed in the appendix to the Announcement, China will continue the exclusion of the tariffs imposed to counter the Section 301 tariffs imposed by the US, from August 1, 2024, to February 28, 2025.

Announcement: https://www.mof.gov.cn/jrttts/202407/t20240724_3940201.htm