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Duty Liability on Chinese VAT at time of presenting a Customs De

Information regarding the imposition of Chinese VAT remains unclear and in certain cases contradictory-in fact some carriers are not levying VAT at the moment adopting a "wait and see” approach.

However, BIFA, in response to queries from Members, contacted HMRC’s Valuation team to establish whether or not Chinese VAT needed to be included in the UK customs declaration and Duty and VAT paid.

HMRC informed BIFA that they were aware of this complex situation and that the situation was fluid and complex. The Departments thinking is that Chinese VAT should be regarded as an internal tax incurred in the country of exportation. Therefore, it follows that under Article 146 of Commission Regulation 2454/93 that any internal tax payable in the country of exportation in respect of any internal tax payable can be left out of the customs value if that is not passed onto the buyer. However, if the UK buyer has to pay the tax it will be considered as part of the cost in obtaining the goods and must be included for customs purposes in the customs declaration and duty and VAT paid at time of importation into the UK.

Article 146 states "Where the price actually paid or payable for the purposes of Article 29 (1) of the Code included an amount in respect of any internal tax applicable within the country of origin or export in respect of the goods in question, the said amount shall not be incorporated in the customs value provided that it can be demonstrated to the satisfaction of the customs authorities concerned that the goods in question have been or will be relieved from for the benefit of the buyer.”

We hope that this clarifies matters and will keep Members updated when additional information becomes available.


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