Customs duty is a tax levied by a country's customs on imported and exported goods passing through its customs territory according to the country's laws. Tariffs in countries generally belong to the highest administrative unit of the country to specify the tax rate of high-level taxes, for foreign trade developed countries, tariffs are often the national tax or even the main revenue of the state treasury. Governments can impose tariffs on both imported and exported goods, but import tariffs are the most important and are the main trade measure.
The basis for the collection of tariffs is the duty-paid price. Imported goods are valued at the CIF price based on the value of the transaction audited by the Customs as the duty-paid price; exported goods are valued at the FOB price of the goods sold with the foreign country minus the export tax, and the price determined by the Customs after examination is the duty-paid price.
The formula for calculating the taxable amount of customs duty is: taxable amount = duty-paid price × applicable tax rate.
Import value-added tax (VAT) refers to the value-added tax levied at the import stage, which is a kind of turnover tax. Unlike general VAT, which is levied on the value-added in the production, wholesale and retail sectors, import VAT is a kind of VAT that is specifically levied on the value-added in the import sector.
China's tax law stipulates that taxpayers importing goods shall calculate the tax payable in accordance with the constituent taxable price and the stipulated VAT rate, and shall not deduct any tax (when calculating the VAT payable in the importing process, no deduction shall be allowed for the various taxes occurring outside China). The formula for calculating the constituent taxable price and taxable amount is:
Component taxable price=duty-paid price+duty+consumption tax
Taxable amount=constituent taxable price x tax rate
It should be noted that the constituent taxable price of imported goods for the VAT has already included the amount of customs duty paid, and if the imported goods belong to the consumption tax dutiable consumer goods, the constituent taxable price will also include the amount of consumption tax paid during the importation. If the imported goods are consumption taxable consumer goods, its composition of the taxable price also includes the amount of consumption tax paid in the import link.
Import VAT formula: Import VAT = (Duty Paid Price + Customs Duty) / (1 - Consumption Tax Rate) x VAT Rate
Relation between Customs Duty and VAT?
The VAT has a cooperative relationship with the customs duty.
Generally, exports are mostly exempted from customs duties, and at the same time, exports are mostly exempted from VAT or the VAT collected is refunded. On the other hand, most imported goods are subject to import tariffs, and at the same time, most of them are also subject to import VAT.
Import: Tariff = duty-paid price X tariff rate, VAT = (duty-paid price + tariff) / (1 - excise rate) X VAT rate.
VAT: It is a tax on the value-added in all stages of production and distribution of goods and labor services.
Taxable Subjects: All units and individuals who sell goods or provide processing, repair and fitting services and import goods within the territory of the People's Republic of China shall be the taxpayers of value-added tax (VAT).
Taxable Objects and Scope of Taxation: In China, the statutory value-added amount of goods and processing, repair and fitting services is the taxable object of VAT. The scope of taxation not only involves the field of selling goods in the production link, but also the sale of goods in the circulation link is subject to VAT.
Tax rate: The current VAT law provides for three tax rates: 17%, 13% and zero rate. Among them, 17% is the basic rate of VAT, 13% is the lower rate, and zero rate is applied to export products.
Customs duty: It is a tax levied on the turnover of goods or articles entering or leaving the customs territory.
Characteristics of tariffs: tariffs are uniformly levied at the national border;
tariffs are levied on the flow of goods or articles in and out of the customs territory;
Customs is the administrative authority for the collection of tariffs. Value-added tax (VAT), consumption tax and customs duty are all turnover taxes, and turnover tax is a type of tax that is levied on the amount of income from the sale of goods and the amount of income from labor or business activities in the flow of goods.
In summary, on the above issue, it is recommended to be sure to distinguish the difference between customs duties and value-added tax, pay reasonable taxes, and be a good law-abiding citizen.
Legal basis: "The Chinese People's *** and the State Import and Export Tariff Regulations" Article 36 of the import and export of goods tariffs, ad valorem, ad valorem, or other ways prescribed by the State. The formula for calculating ad valorem is: taxable amount = duty-paid price × tariff rate; the formula for calculating ad valorem is: taxable amount = quantity of goods × unit tax amount