For most imported products, China charges tariffs. Wine import tax in China is mainly ad valorem or based on the estimated value of the goods or transaction concerned. It is the job of China’s General Administration of Customs to administer tariffs and to publish a tariff schedule annually.
Tariffs include the packing charges, freight, insurance premiums and other service charges prior to the unloading of the goods at a specific destination. Value added tax (VAT) and consumption tax are assessed upon arrival in China.
Import Tax on Wine in China
China imposes three types of taxes on alcohol – import custom duty, excise tax and value-added tax. For wine, the rate for custom duty is 14%. This is for vintages with 20% or lower alcohol content by volume. The rate goes up to 20% for bulk wine or those with an individual packing of more than two liters.
To compute, the Cost, Insurance and Freight (CIF or C&F price), or the expense paid by a seller to cover the possibility of loss or damage to a buyer’s order while it is in transit, must be determined first. Custom duty is CIF multiplied by 14%. For excise tax and VAT, the following computations are applied.
Excise tax = [ (CIF + import tariff) / (1 – 10%) ] x 10%
Value-Added Tax = (CIF + import tariff + excise tax) x 17%
In total, the amount of taxes to be paid for imported wine is at 48.2%. This does not include documentary and handling fees charged by the shipping company and freight forwarder, among others. For example, if the CIF price in the China harbor is at US$10,000 for 2500 bottles of wine valued at US$4 each, the importer has to play an additional US$4,820 for the taxes.
There are exceptions, however. Countries who are in Free Trade Agreements (FTAs) with China can import wine tariff-free in a certain period of years. New Zealand, Chile and Georgia only pay the 27% taxes rate for their imports. Meanwhile, China and Australia’s FTA came into force only January of this year.
The United States also has a different rate to follow. In 2018, China has increased tariff on the country’s wine imports, adding another 15% on top of the existing 14%. American wine producers have to pay 29% import tariff, bringing the total amount of taxes to be paid up to 67.7%, including VAT and excise tax.
Parting Thoughts on Wine Import Tax in China
Regulations on the import of goods on China’s domestic market are complex and also changing rapidly. It is important for wine producers to always be updated. This way, they can avoid problems that may lead to confiscated imports, shipment delays, and other penalties.