Beijing: The Chinese government has issued a new circular on its value-added tax policy that relates to maritime commerce.
Chinese law requires foreign shipping companies to use either wholly-owned subsidiaries or third-party agents to collect ocean freight. Under the previous business tax regime freight forwarders were allowed to deduct international freight from their taxable income.
However, from August 1, 2013, freight forwarders are required to pay a 6% VAT charge as well as local surcharges on gross proceeds collected from clients.
The new policy, which will come effective from January, 2014, has eliminated the unequal tax treatment of foreign shipping companies by allowing the deduction of international freight from the taxable income of freight forwarders. [27/12/13]
