In response to confusion over the scope and application of a new business value-added tax (VAT) enacted by the People’s Republic of China (PRC), the National Industrial Transportation League (NITL) has requested assistance from the U.S. Government in obtaining clarifications on the VAT from the Chinese government.
NITL President and CEO Bruce Carlton in letters written to the U.S. Department of State, U.S. Federal Maritime Commission and the U.S. Department of Transportation’s Maritime Administration said the new Chinese tax which came into effect on August 1, 2013 has created much confusion as to its application and resulting impacts especially on freight moving between the two countries.
According to the PRC, Carlton noted the six percent VAT is applicable to domestic shipping, logistics and freight forwarding in China and not specifically to international ocean freight. “Nevertheless we have monitored reports that some ocean carriers and non-vessel operating common carriers (NVOCCs) are simply passing on the tax to their customers in the form of surcharges or service charges even when the freight charges have been, ‘pre- paid.’”
This confusion he concluded, “is clearly generating considerable market uncertainty for shippers not only in the region, but in the U.S. as well.”