The Vessel Tonnage Law of the People’s Republic of China (the “Vessel Tonnage Tax Law”) officially came into effect on July 1, 2018, and the Provisional Regulations of the People’s Republic of China on Vessel Tonnage Taxes promulgated in 2011 were abolished. The General Administration of Customs will be using the promotion of paperless filing and payment of vessel tonnage taxes as a means to ensure the implementation of the Vessel Tonnage Tax Law, while further reducing the overall customs clearance time and promoting trade facilitation. The Vessel Tonnage Tax Law is highlighted below:
1. Starting from the effective date, vessel tonnage taxes for a vessel entering a domestic port from an overseas port shall be paid according to the tax rate indicated in the Vessel Tonnage Tax Law. Except for taxable vessels of Chinese nationality, preferential tax rates shall apply to a taxable vessel whose country (region) of registry have entered into a treaty or agreement with China containing mutual most-favored-nation vessel tax and fees clauses. The all other taxable vessels shall be subject to general tax rates.
2. In handling the immigration formalities upon entering port in a taxable vessel, taxes shall be declared and paid to the customs in exchange for a tonnage tax certificate, or a tonnage tax certificate shall be presented for verification. When applying for a tonnage tax certificate, the person in charge of the taxable vessel shall provide the vessel’s certificate of registry, or the vessel’s certificate of registry as issued by the maritime authority, as well as the vessel tonnage certificate.
3. If the customs had approved the declaration and handled the entry and exit procedures before the taxable vessel arrived at port, the person in charge of the taxable vessel shall provide the customs with a guarantee commensurate with the obligation to perform the tax payment.
4. After the person in charge of the taxable vessel pays the tax or provides the guarantee, the customs shall issue a tonnage tax certificate based on the term of certificate set forth in the application.
5. If the vessel is eligible for tax exemption or an extension of the term of its tonnage tax certificate under the Vessel Tonnage Tax Law, valid supporting documents or documents showing usage relations issued by the maritime authority, the fishing vessel administrative authority or the entry-exit inspection and quarantine authority or agency shall be provided, along with a statement on the basis and reasons for tax exemption or certificate extension.