On April 26, 2024, the Standing Committee of the 14th National People’s Congress (NPC) passed the Tariff Law of the People’s Republic of China (Tariff Law), which will take effect on December 1, 2024. It comprises seven chapters and 72 articles, covering General Provisions, Tariff Categories and Rates, Taxable Amounts, Tax Incentives and Special Cases, Collection and Management, Legal Liability, and Supplementary Provisions. The law includes a new Import and Export Tariff Schedule, which will take effect on the same day.
Before the enactment of the Tariff Law, China’s customs duties were levied based on the Regulations of the People’s Republic of China on Import and Export Duties (Regulations). According to the explanation by the Legislative Affairs Commission of the Standing Committee of the NPC, the Tariff Law was introduced in response to changes in both domestic and international circumstances, and was formulated after summarizing the experiences gained from implementing the Regulations. The Regulations will be repealed the day the Tariff Law takes effect. (Tariff Law, art. 72.)
Retaining and Updating Provisions on Retaliatory Tariffs
The Tariff Law retains the provisions on retaliatory tariffs from the previous Regulations, empowering China to impose retaliatory tariffs when a foreign country or region violates relevant trade agreements by adopting restrictive measures such as prohibitions, increased tariffs, or other actions. (Tariff Law, art. 18, para. 1; Regulations, art. 14, para. 1.)
The Tariff Law introduces two notable updates. First, it includes countermeasures for violations of most-favored-nation treatment or tariff preferences by other parties, allowing China to take corresponding measures based on the principle of reciprocity. (Art. 17.) Second, it alters the procedure for retaliatory tariffs—under the previous Regulations, the Tariff Policy Commission determined the specifics of retaliatory tariffs, while under the new law the Commission will submit recommendations for approval by the State Council before implementation. (Arts. 17 & 18, para. 2; Regulations, art. 14, para. 2.)
Elevating Technical Tariff Standards to Legal Norms
The two basic elements of tariffs are taxable items and tariff rates. Taxable items represent the scope and subjects of taxation that are identified through classification codes and names. Tariff rates reflect the degree of taxation on the items. The classification rules for goods connect these two elements, specifying how taxable items correspond to applicable rates.
The Tariff Law introduces a dedicated chapter on “Taxable Items and Tariff Rates,” outlining the rules for tariff items and the classification of goods. (Art. 9.) This ensures that the core elements of tariffs are concretely defined.
The Tariff Law also introduces rules on determining the origin of goods, to align China’s tariff practices with international standards. Goods wholly obtained in one country or region are considered to originate from there, while those produced across multiple locations are considered to originate from where the last substantial transformation occurred. In cases where international treaties or agreements provide different rules, those provisions will prevail. (Art. 11.)
Enhanced Administration of Cross-Border E-Commerce
Regarding cross-border e-commerce, the Tariff Law defines entities obligated to serve as tax withholding agents to include platform operators, logistics companies, tariffs declaration enterprises, and entities and individuals engaged in retail imports. (Art. 3, para. 2.) With the rapid development of cross-border e-commerce in recent years, previous regulatory gaps have hindered industry growth. This provision identifying withholding agents provides a legal basis for taxation of cross-border e-commerce by defining the withholding obligations of all participating entities.
Additionally, the Tariff Law stipulates relevant penalties, clarifying the compliance obligations and legal responsibilities of entities other than taxpayers, such as tax withholding agents. Notably, tax withholding agents may be subject to fines ranging from 50% to three times the amount of unpaid tariffs in cases where tariffs are underpaid. (Art. 64.)
Prepared by Jingjing Gao, Law Library Intern, under the supervision of Laney Zhang, Foreign Law Specialist
October 11, 2024
Read more Global Legal Monitor articles.