CBP Says Chinese VAT on Freight Services Can be Excluded from Transaction Value

The value added tax (VAT) imposed by the Chinese government on freight services may be excluded from the price actually paid or payable for imported merchandise, said CBP in HQ H264877 (here). CBP told MIQ Logistics, which requested the ruling, that certain VAT charges may be included among the costs considered to be incidental to the shipment and can be excluded from the transaction value. The ruling is dated July 10.

MIQ sought CBP input on whether some charges for services provided by the logistics company should be included within the transaction value, said CBP. The importer, an undisclosed beauty products company that sources products from foreign manufacturers, uses MIQ to prepare export documentation, terminal charge payments "and a variety of other origin related services." Among the fees asked about is the VAT, "a tax imposed by the Chinese government on the freight services of an international freight forwarder performed in the Port of Shanghai."

The company provided to CBP information released by the Federal Maritime Commission on the new 6 percent VAT on foreign shipping companies (see 13122021). "To the extent that the VAT assessed represents a tax on the freight services of an international freight forwarder and not a tax on the merchandise, we find that it is a charge incident to the international shipment of merchandise," said CBP. CBP has also previously determined that the fees related to container seals, AMS data, container freight station receiving, customs clearance, documentation, equipment interchange receipt, and terminal handling "are charges incident to the international shipment of the merchandise," it said.