The calculation of import tariffs for machinery and equipment involves a two-step formula: ① Tariff = Dutiable Value (CIF) × Tariff Rate; ② Import VAT = (Dutiable Value + Tariff + Consumption Tax) × 13% — Dutiable Value = CIF Price (Cost of goods + International freight + Insurance, up to the first port of entry). Example: CIF $10,000 + 5% rate → Tariff $500 + VAT $1,365 ≈ Total Tax $1,865.
I. Determination of Dutiable Value
Dutiable Value = Transaction Price (actually paid/payable) + Transport costs incurred before unloading within the territory + Insurance premiums (CIF basis);
Used Equipment: Customs accepts depreciated appraised values (based on professional appraisal reports, which can significantly lower the tax base); Related-party Transactions: Customs may review price reasonableness (prices lower than market rates are subject to adjustment) — The dutiable value serves as the tax base for both tariffs and VAT; under-reporting carries the risk of back-taxes and fines.
II.
Tariff Calculation
Ad Valorem Duty: Tax Payable = Dutiable Value × Tariff Rate (Machinery Chapter 84 MFN rates: 0–15%; CNC machine tools temporary rates: 5–9%); Specific Duty: Quantity × Unit Tax Amount (applicable to a small number of categories); FTA Preferential Rates: Preferential rates (some as low as 0%) apply with Certificates of Origin under agreements such as China-ASEAN or RCEP — Rates are determined based on the HS subheading and country of origin (the 2026 Tariff Adjustment Plan takes effect on January 1st).
III. VAT Calculation
Import VAT = (Dutiable Value + Actual Customs Duty + Actual Consumption Tax) × 13% (13% for machinery/equipment, 9% for agricultural products); Consumption Tax: Generally not levied on machinery (levied only on luxury goods, tobacco, alcohol, etc.); Non-deductible status: Import VAT is paid at the time of importation (it can be claimed as an input tax credit for domestic sales)—VAT is calculated on top of customs duty (compound taxation; total tax burden = CIF × (1 + duty rate) × 1.13).
IV.
Total Tax Example
Example: CIF value of USD 10,000, customs duty of 5%: Customs duty = 10,000 × 5% = USD 500; VAT = (10,000 + 500) × 13% = USD 1,365; Total tax = 500 + 1,365 = USD 1,865 (effective tax rate of 18.65%); FTA Example: ASEAN Certificate of Origin results in 0% customs duty → VAT = 10,000 × 13% = USD 1,300 (saving USD 500 in duty)—Total tax = Customs duty + VAT (typically ranges from 13% to 28% for machinery, depending on the specific tax bracket).
V. Key Points for Overseas Buyers/Importers
Key considerations include: precise HS code classification (due to significant variations in tax rates); utilization of FTA Certificates of Origin (to lower tariffs); valuation of used equipment (depreciation reduces the tax base); consistency in declared values (alignment across the invoice, contract, and payment records); and calculation of total landed cost (CIF + tariff + VAT = total landed cost)—where Import Tariff = CIF × tax rate, and VAT = (CIF + tariff) × 13%.
Leveraging FTA Certificates of Origin and used equipment valuation can significantly reduce the overall tax burden.
