Ministry of Finance, State Development Planning Commission, State Economic and Trade Commission, Ministry of Foreign Trade and Economic Cooperation, General Administration of Customs and State Administration of Taxation, Adjustment of Certain Preferential Import Tax Policies Circular

Issued: September 4 2002
Effective: October 1 2002

Main contents: The Circular changes the preferential tax policy on equipment (including goods imported within the remaining quota by projects funded with loans from foreign governments and international financial institutions) imported within the investment amount of the project or the total amount of investment for one's own use by technology transformation projects, capital construction projects (including major construction projects) and foreign-invested projects that were approved before April 1 1996. Such equipment is exempted from customs import duties and import-stage value-added tax if it is not included in the Imported Goods Not Exempt from Duty and Tax for Domestic Investment Projects Catalogue and Imported Goods Not Exempt from Duty and Tax for Foreign Investment Projects Catalogue (Item One)
As of the effective date of the Circular, customs import duty and import-stage value-added tax shall be levied in accordance with regulations on imported equipment for all newly approved permitted category projects of which the products are all directly exported. If the direct export of products is found to be properly implemented, 20% of the tax paid will be refunded each year and will be refunded in full in five years (Item Two).
Applications for exemption or reduction of import duty and tax for individual projects will no longer be entertained (Item Three).
Related legislation: State Council, The Adjustment of Tax Polices on Imported Equipment Circular, Dec 29 1997, CLP 1997 No.1 p11; Foreign Investment Industrial Guidance Catalogue, Mar 11 2002, CLP 2002 No.3 p37; Tax Refund for Certain Imported Goods Circular, 1994; Imported Goods Not Exempt from Duty and Tax for Domestic Investment Projects Catalogue (2000 Revision), Sep 7 2000, CLP 2000 No.9 p12 and Imported Goods Not Exempt from Duty and Tax for Foreign Investment Projects Catalogue (Trial Implementation), Dec 31 1997, CLP 1997 No.2 p13