China import duty: obscene

[Manuel]

Recently I bought a computer keyboard from the US worth 250 USD. Last year I purchased one similarly priced piece of electronic equipment from Japan and the courier, also UPS, demanded around 60RMB from what I remember.

This time, however, import duty was a jaw-dropping 554.87 RMB (about 90 USD). Considering the value of the item, this figure is obscene.

I didn't reject the parcel because of new-toy excitement, and I feared there might be all sorts of bureaucratic repercussions.

A Chinese friend told me that at customs parcels are randomly picked for closer inspection. This way customs officers can, statistically, identify most business shipments (if a trader sends many parcels every month chances are theirs will get picked sooner or later) as opposed to private, one-off shipments.

So did I get the short straw or do those numbers look about right?

[roddy]

It's 6% customs duty for electronics, 17% sales tax, as far as I can see. Not sure how it works there, but here in the UK you'd also pay an administration fee to the courier for clearing customs I think. Was the cost broken down for you?

[Manuel]

Kind of...

Item's original price: 250 USD = 1530元 at today's exchange rates

• 进口增值税：313.97元 Import tax = 20.5%
  
• 关税：240.90元 Customs duty = 15.7%
  

Not much of a breakdown, considering they didn't even bother to quote percentages or the item total value on the invoice. As far as I am concerned they got these numbers out of nowhere.

More irritating is the fact that they have to make a science of it: it's like you need a PhD in quantum physics to be able to work out tax.

According to this website:

Duty rates in China vary from 0% to 100%, with an average duty rate of 12.47%.

Unfortunately they don't mention whether those percentages apply to all days of the week or just sunny Fridays. Then it goes on:

Some products can be imported free of duty, e.g. laptops and other electronic products.

So keyboards are not included, it seems...

[gato]

The sales tax (VAT) is based on the sum of the declared value and the customs tax. That's why it appears to be 20-some percent of the declared value even though the official sales tax rate is 17%.

The sales tax is the biggie. That's why many products are much more expensive in China. But when you buy something in China, the sales tax is not listed on the receipt, so it's a hidden tax.

The sales tax is the biggest revenue generator for the Chinese government of all taxes. Yet it's also the most regressive tax because the rich spend a smaller percentage of their income on buying consumer products. They buy stocks and real estate which aren't subject to sales tax.

Personal income tax and corporate income tax both generate less revenue in China, even though you'd think they'd be higher because there's so much tax evasion -- including government encouraged tax evasion. For example, the government doesn't tax profits on sales of houses or stocks. Doesn't seem logical that a Communist country should favor owners of real estate and stock, but there you have it.

[Manuel]

Thanks gato, very insightful. So basically you are saying the numbers look right, correct? Not sure though why last time I was asked to pay so little tax for a similarly priced MIDI controller imported from Japan. Perhaps the country of origin is also taken into account.

Re. basing VAT on the sum of the declared value and the customs tax, that's a bit rich: I am being taxed for "purchasing" tax, which of course they sold me. It's almost like paying tax for being sick.

The keyboard I bought is manufactured in the States by a small UK-US based company named C-Thru Music, and AFAIK they only do small production runs as orders trickle in, therefore I was unable to buy this item on Taobao (which would have been more straightforward). However, popular MIDI keyboards sell on Taobao at prices comparable to those in Europe or the US, so I am assuming these have been illegally smuggled into the China---not surprising considering how heavily such items are taxed.