China Clarifies Import Duty Treatment For Foreign Invested Projects

On January 29, 2012, the General Administration of Customs issued the Announcement on Relevant Issues Concerning the Implementation of the 2011 Foreign Investment Industrial Guidance Catalogue. According to the announcement, from January 30, 2012, the importation of own-use equipment within the total investment of foreign invested projects (including capital-increasing projects) under the encouraged category of the 2011 catalogue will be exempted from customs duties but will be subject to import value added tax. This policy also applies to technologies, accessories and parts imported together with such equipment based on contracts. However, the afore-mentioned tax treatment does not apply to equipment listed in the Catalogue of Imported Goods Not Exempted from Taxes for Foreign Invested Projects and the Catalogue of Major Technical Equipment and Products Not Exempted from Imported Duties. Foreign invested projects which fall into the encouraged category according to