United States: Shipping Firms Seek Clarity On Chinese VAT Scope
22 August 2013
Posted by: Author: Mike Godfrey
Author: Mike Godfrey
In a letter to the US Department of State, Bruce Carlton, the President and Chief Executive Officer of the United States's National Industrial Transportation League has called for assistance in obtaining clarifications from authorities in China regarding the application and scope of its value-added tax, which was expanded nationwide on August 1, 2013.
Carlton wrote: "While the new VAT is not supposed to be aimed at the movement of international freight, there appears to be much confusion as to its application and resulting impacts especially on freight moving between China and the US."
"The League is one of the oldest and largest associations representing freight transportation professionals. Our members are engaged in using all transportation modes both domestically and internationally. As such, many of our members are specifically engaged in transporting products to and from China."
"According to PRC sources, the VAT of six percent is applicable to customers for all charges related to domestic shipping, logistics and freight forwarding and related services in China. We believe it is not specifically applicable to international ocean freight. Nevertheless we have monitored reports that some ocean carriers and non-vessel operating common carriers (NVOCCs) are simply passing on the tax to their customers in the form of surcharges or service charges even when the freight charges have been 'pre-paid'," he explained.
"In general there appears to be widespread confusion over the application of the new VAT enacted by China, as well as its implementation by service providers. This is clearly generating considerable market uncertainty for shippers not only in the region but here in the US as well."
His letter concludes: "We would respectfully request your help in obtaining clarification from China to help end this confusion and bring greater certainty to the application of the VAT on international ocean transportation."