(Source: https://pltfrm.com.cn)
Yes, foreign shipping or logistics companies operating in China are subject to specific tax regulations. Understanding these is crucial for compliance and strategic financial planning. Here are the key tax considerations:
- Corporate Income Tax (CIT):
- Income derived from transportation and logistics services in China is subject to CIT. The standard rate is 25%. However, if the foreign company does not have a permanent establishment in China, only the income sourced in China is taxed.
- Value-Added Tax (VAT):
- Shipping and logistics services are subject to VAT. As of my last update, the standard VAT rate for these services was 9%, but this rate is subject to change.
- Foreign companies may need to register for VAT and comply with VAT filing and payment requirements. In certain cases, the VAT may be withheld by the Chinese party paying for the services.
- Withholding Tax:
- Payments made to foreign logistics companies for services rendered in China are typically subject to withholding tax. The standard rate is 10%, but this may be reduced under Double Taxation Agreements (DTAs) between China and the company’s home country.
- Business Tax:
- Previously, services like shipping and logistics were subject to Business Tax in China, but this has largely been replaced by VAT.
- International Transportation Income:
- Income from international transportation services may enjoy tax exemptions or preferential treatment under specific regulations or DTAs. For example, income derived from the international transportation of goods or passengers may be exempt from CIT.
- Customs Duties and Import Taxes:
- Logistics companies involved in the import and export of goods need to consider customs duties and import taxes. These taxes vary depending on the type of goods and their origin.
- Double Taxation Agreements:
- DTAs may provide specific rules for the taxation of shipping and logistics companies, including exemptions or reduced tax rates.
- Transfer Pricing:
- Transactions between related parties in the logistics sector must adhere to the arm’s length principle. Proper documentation and compliance with transfer pricing rules are essential.
- Local Incentives:
- Certain regions in China may offer tax incentives for logistics companies, especially those investing in infrastructure or technology related to transportation and logistics.
- Regulatory Compliance:
- Compliance with other regulatory requirements, including those related to transport licenses, safety, and environmental standards, is also important, as non-compliance can have tax implications.
Foreign shipping or logistics companies should engage with local tax professionals and customs brokers to navigate these complex rules and regulations effectively. Proper planning and compliance are essential to optimize tax liabilities and ensure smooth business operations.
PLTFRM is an international brand consulting agency that works with companies such as Red, Tiktok, Tmall, Baidu, and other well-known Chinese internet e-commerce platforms. We have been working with Chile Cherries for many years, reaching Chinese consumers in depth through different platforms and realizing that Chile Cherries exports in China account for 97% of the total exports in Asia. Contact us and we will help you find the best China e-commerce platform for you. Search pltfrm for a free consultation!
