Vessel Tonnage Tax
23 Vessel Tonnage Tax
This tax is levied on specified vessels (vessels subject to this tax are exempt from Vehicle and Vessel Usage Tax). The Provisional Method of the People's Republic of China on Customs Vessel Tonnage Tax was promulgated by the State General Administration of Customs, upon approval by the Financial and Economic Committee of the Administrative Council of the Central Government, on September 29, 1952, and came into effect on the same date.
Upon approval by the Financial and Economic Committee of the Administrative Council, the State Council made revisions to the Provisional Method in 1954, and the Ministry of Foreign Trade and Economic Cooperation made further revisions in 1974. The tax rates currently in force were implemented as of March 15, 1994.
Vessel Tonnage Tax is administered by the State General Administration of Customs. The revenue collected belongs to the Central Government. In 2003, revenue from Vessel Tonnage Tax amounted to 0.94 billion yuan.
Taxpayers are the users of taxable vessels, or foreign vessel agent companies entrusted by them to use the vessels.
What Constitutes a Taxable Vessel
Motored or non-motored vessels that fall into any of the following categories are deemed to be taxable vessels:
- Foreign vessels that enter China's harbors.
- Chinese vessels chartered to foreign businessmen.
- Chinese or foreign vessels used by Sino-foreign joint-operation enterprises.
- Foreign vessels that are chartered in China but sail overseas, or foreign vessels chartered in China that both sail overseas and engage in domestic coastal trade.
Where Chinese vessels transport foreign goods under one-way leasing arrangements, they do not constitute taxable vessels.
Tax payable is based on the registered net tonnage capacity of the taxable vessels.
Where capacity figures need to be rounded off, the following rules apply:
- Less than 0.5 ton: Counted as 0.5 ton.
- More than 0.5 ton: Counted as 1 ton.
Small vessels whose capacity is less than 1 ton shall be treated as 1-ton vessels.
Tax per unit is based on quantity, and takes into account the vessel type, the net tonnage and relevant rules (see Table 23.1).
|Table 23.1 Tax per unit|
|Type of vessel||Net tonnage||Standard tax per unit (yuan/ton)||Preferential tax per unit (yuan/ton)|
|90 days||30 days||90 days||30 days|
|Motored vessels (including ships, steamships, and tugboats)||Under 500 tons||3.15||1.50||2.25||1.20|
|More than 10,000 tons||9.30||4.65||6.60||3.30|
|Non-motored vessels (including man-powered vessels, barges, and sailing boats)||Under 30 tons||1.50||0.60||1.05||0.45|
|More than 151 tons||2.10||1.05||1.50||0.90|
Preferential treatment is given to taxable vessels whose country of registration has concluded Most-Favored Nation conventions or treaties with China on tax and charges on the vessels. Otherwise, the standard tax per unit shall apply.
At present, 63 countries and regions are eligible for preferential treatment, including Hong Kong and Macao.
In general, the following formula is used to compute tax payable on a taxable vessel:
Tax payable = Net tonnage of taxable vessel × Applicable tax per unit
The following vessels may be exempt:
Vessels Entering Harbor Without Loading/Unloading
Where vessels enter China's harbors for the following reasons, without loading/unloading passengers/cargo, they may be exempt:
- Cessation of operations.
- Loading of fuels/materials for the use of the vessels.
Where parking pontoons, floating dock pontoons, or floating docks are used exclusively for the following purposes, they may be exempt:
- Carrying of passengers.
- Loading/unloading of cargo.
- Storage of goods.
- Vessels used by foreign embassies or consuls who are eligible for diplomatic immunity granted by China.
- Vessels taken over for use or rented by the Central Government or local governments.
Filing of Declarations, Supporting Documents
Where any taxable vessel enters China's harbors without a valid Vessel Tonnage Tax license issued by Customs, the taxpayer should handle payment formalities with Customs at the entry point.
The taxpayer needs to file declaration forms, and to provide supporting evidence substantiating the nationality of the vessel and its tonnage. The taxpayer should also state which validity period (90 days or 30 days) he/she wishes to request for the tax license.
After examining the forms and supporting documents, Customs shall levy tax based on the validity period requested by the taxpayer. It shall then issue to the taxpayer the tax payment forms for him/her to make payment.
Settlement of Tax Payments
The taxpayer should, within 15 days (excluding holidays) of receiving the payment forms, pay tax to the specified bank.
Issuance of Licenses
After payment is completed, Customs shall issue the tax license to the taxpayer.
License Validity Period
The validity period starts from the date of the entry declaration. During this period, the vessel may stop in or sail between China's harbors.
After the license expires, if the vessel still needs to stop in or sail between China's harbors, tax should be reported and paid again to Customs, within 5 days of the second day of expiration.
The validity period of the new license shall start from the second day of the expiration of the previous license.
Where vessels have already paid tax, Customs may, in of any of the following circumstances, extend the validity period according to the number of days needed for the extension, after examining supporting documents issued by the harbor administration department:
- Where vessels enter China's harbors for refuge or repair.
- Where vessels cannot load/unloaded passengers/cargo because of isolation measures implemented to prevent the spread of epidemics.
- Where vessels are taken over for use or rented by the Central Government or local governments.
Incorrect or Overlooked Payments
Where the chief of a vessel pays tax several times because of unfamiliarity with the relevant rules, or where tax is wrongly collected or overlooked, Customs may handle rebates or demand payment within 1 year by producing the valid documents.
Fines for Nonpayment
Where the taxpayer fails to pay tax in time, a fine shall be imposed at the rate of 0.1% per day.