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|CHINA: CUSTOMS, TAXES and DOCUMENTATION REQUIREMENTS for IT PRODUCTS and SERVICES IMPORTS |
A. Is this country a member of the Information Technology Agreement?
B. Customs documentation requirements for IT products
C. Software: duties and taxes, updates, licenses, electronically delivered
D. IT services: tax treatment and other regulations
E. Certifications and financial controls for software and IT services
F. Refurbished, used, or repaired computer equipment imports
A. IS THIS COUNTRY A MEMBER OF THE INFORMATION TECHNOLOGY AGREEMENT?
YES. Upon accession to the ITA in December 2001, China agreed to eliminate tariffs on three fourths of ITA products by January 1, 2003, and eliminate tariffs on all remaining ITA products by January 1, 2005. To find out China's current tariff rate on your exact IT product, call the Trade Information Center at 1-800-USA-TRADE.
Signatories to the Information Technology Agreement (ITA) have eliminated their import duties on a wide range of information technology products, including software and computer hardware. For more information on the ITA, and exact tariff elimination schedules of signatories, click here.
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B. CUSTOMS DOCUMENTATION REQUIREMENTS FOR IT PRODUCTS
What are the documentation requirements for the physical import of software? For other information technology products?
Documents required for the import of software and other information technology products: bill of lading, packaging list, invoice, and a customs declaration form.
Companies who want to export software (or any other product for that matter) to China must first find a Chinese company that has been authorized by the Chinese Ministry of Commerce (MOC) to operate with an import license. The Chinese companies with authorized import licenses can assist U.S. companies in exchanging Chinese currency into U.S. dollars. According to China's WTO commitment, China will open their import/export license regulations, however, changes are not expected for another year or two.
Must the Chinese importer hold an import license to buy U.S. products?
Following WTO accession commitments, Chinese importers of software are no longer required to hold an import license. However, in order to exchange Chinese currency into U.S. dollars, foreign currency authorization as part of the Chinese entity’s business license is necessary.
What IT products require a China Compulsory Certification (CCC) mark?
The CCC safety license requirement by the government of China requires manufacturers obtain the CCC mark before exporting to or selling products in China. Many IT products or component parts require the CCC mark. View the product catalog for CCC at: http://www.mac.doc.gov/china/CNCA%20Announcement%2060%20English.pdf . Further details on CCC and the application procedures are available at:
See section E for other certification and financial controls information.
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C. SOFTWARE: DUTIES and TAXES, UPDATES, LICENSES, ELECTRONICALLY DELIVERED
DUTIES AND TAXES ON SOFTWARE IMPORTS
Are duties assessed on the intellectual property of the software or on the medium on which is it presented?
Duty rates are determined by the type of medium on which software is presented. The current tariff rate (duty) is 0.
Are taxes assessed on the intellectual property of the software or on the medium on which is it presented?
The tax (VAT and etc.) is based on the intellectual property value of the software. VAT is 17%. A 10% withholding tax also applies to software products.
Is customized software treated differently than packaged software?
There is no difference in treatment of customized and packaged software.
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IMPORTS OF SOFTWARE UPDATES
What are the customs duties and tax implications for software sold with updates when the full sales price, including cost of updates, is shown on the original commercial invoice? Are duties and taxes paid on that amount? What happens when the updates are sent at a later date? Are duties/taxes applied again? If so, based on what value? How should information presented on the commercial invoice for the original and subsequent shipments to avoid paying duties/taxes more than once on a single sale?
Yes. Duty and VAT taxes are paid according to the declared value and at rate of the medium on which it is presented. The current tariff rate is 0. VAT is 17%. A 10% withholding tax also applies to software products.
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SOFTWARE LICENSES: CUSTOMS CLASSIFICATION, IMPORT DUTIES, TAXES, OTHER
Are software licenses classified in Harmonized System 4907?
Software licenses are not classified in harmonized system 4907. Customs controls only shipment of physical goods. If there is no physical shipment, customs does not have a mechanism to control licenses unless companies use a physical package to go through customs, such as a disk or envelope. In this case, the product will be classified under 8523.
Are import duties/taxes applied? If so, on what cost/price base are they levied?
Yes. VAT and a 10% withholding tax are applied to software licenses.
Are withholding or other additional taxes applied on software licenses? If yes, how?
Yes. A 10% withholding tax is applied to software licenses.
If a U.S. license agreement is included in the packaging or is part of the installation/registration of shrink-wrapped software imported from the United States, would that agreement be binding on consumers in your market? If so, would U.S. or local laws pertain?
Local laws will pertain.
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SOFTWARE DELIVERED OVER THE INTERNET/ELECTRONICALLY DELIVERED SOFTWARE
Are taxes applied to software delivered to the end-user over the Internet? If so, on what value?
A 10% withholding tax and VAT is applied. The tax is collected according to the value indicated on the commercial invoice.
Would the situation be different if this software were instead delivered to a distributor who has a license to produce (replicate) and sell the software?
No difference to software licensed to distribution for reproduction and duplication.
What are the documentation requirements for the electronically delivered import of digitized products (i.e. software, movie downloads) over the Internet or other networks?
There is no mechanism to track import of digitized products over the Internet or other networks (software, movie, music) by customs. For movies and music, the trade is conducted mainly in the form of licenses to copyrights. Special permits are required from the Ministry of Cultural and the Press and Publication Administration in addition to the normally required documents including invoice, declaration, bill of lading (if applicable), list of packages (if applicable)
Must an electronically delivered software import be accompanied by a physical shipment of the same product?
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D. IT SERVICES: TAX TREATMENT AND OTHER REGULATIONS
Are services (i.e. training, set-up, etc) relating to the sale of software taxed? If so, at what rate and based on what value?
A 10% withholding tax is applied to services based on invoiced value.
Are U.S. IT solution providers permitted to send personnel into the country to set up hardware/software-related systems?
Are special visa, work permits, and/or professional certification by an accredited body required?
Documents required: invitation letter, passport, and a completed visa application form. No special work permit or professional certification is needed for stay within 6 months.
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E. CERTIFICATIONS AND FINANCIAL CONTROLS FOR SOFTWARE AND IT SERVICES
Do foreign software products need to be registered before being sold in China?
Yes. Foreign software products need to be registered at the China Software Industry Association (www.csia.org.cn) before selling into the China market. The Ministry of Information and Industry approves the registration. U.S. firms cannot register their product directly, registration must instead be made by a Chinese entity. Regulation specifics are available in Chinese at http://www.chinasoftware.com.cn/cognizance_guide_product.asp#.
What certifications are required of software and IT services?
China runs a dual-certification system on software and IT services companies as well as software products. Three key requirements are:
How do financial controls affect software imports?
- Sales of the enterprise encryption software in the China market needs to comply with the Commercial Cryptography Administration Regulation. The official regulations, in Chinese, can be found at: www.oscca.gov.cn/index.htm.
- Enterprise encryption software products need to pass the technical tests/inspections to receive the approval certificate from the State Cryptography Administration Bureau.
- The sales office of the enterprise encryption software companies needs to receive a sales business license from the State Encryption Administration Office (OSCCA). The sales offices should also report the sales status to OSCCA or its local offices to register by the end of each quarter.
In order to track software sales, the Chinese government now requires that Chinese software importers submit proof of delivery to China's State Administration of Foreign Exchange (SAFE), usually in the form of signed contracts. The official regulations, in Chinese, can be found here: http://www.safe.gov.cn/model_safe/laws/law_detail.jsp?ID=80100000000000000,47&id=4. The regulations explain who is affected and why, and give information on the rights of Chinese authorities and penalties for non-compliance.
F. REFURBISHED, USED, OR REPAIRED COMPUTER EQUIPMENT IMPORTS
1. REFURBISHED COMPUTER EQUIPMENT
Is the import of refurbished computer hardware, parts, and accessories (including toner cartridges) permitted?
Currently import of refurbished computer hardware, parts, and accessories is tightly restricted. A special permit needs to be obtained from MOFTEC (Ministry of Foreign Trade and Economic Cooperation) if such an import is needed. However, an official from MOFTEC has indicated that a revision to the tightly restricted regulation will be issued soon.
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2. USED COMPUTER EQUIPMENT
Is the import of used computer hardware, parts, and accessories (including toner cartridges) permitted?
See above answer.
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3. REPAIRED COMPUTER EQUIPMENT
Are duties and taxes assessed on the re-import of repaired computer equipment?
Computer equipment re-imported after repair is not taxed if it is within the warranty period. After the warranty period, the repair service is taxed.
How should the commercial invoice appear?
Invoice needs to indicate the repair service fee.
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This response was prepared by the U.S. Department of Commerce/Commercial Service in Beijing in August 2008. For further clarification please contact:
U.S. Embassy Beijing, U.S. Commercial Service
Tel: (8610) 8529-6655 ext.856
Fax: (8610) 8529-6559
Senior Commercial Specialist
U.S. Consulate General, U.S. Commercial Service
Tel: (86-21) 6279-7630 ext. 6245
Fax: (86 21) 6279-7639
Special Notes: The above information is intended to serve only as unofficial guidance. In seeking to obtain government rulings in specific cases, it will often be necessary to refer to special laws, separate regulations and announcements, and case-by-case decisions by the government. Beyond the general guidelines shown above, legal counsel should be retained at an early stage of consummation of a major procurement contract, and before entering into any legal commitments.