25 July 2016
Shanghai to Pilot Bonded Storage for Parallel Car Imports
The Shanghai Customs recently piloted the bonded warehousing service for parallel car imports in the Shanghai Free Trade Zone. Bonded warehouse supervision measures were also announced for car dealers to enjoy cost savings.
The customs authorities spelled out the qualifications for pilot parallel car import dealers, the method for the computation of the bonded warehousing period, the requirements for customs declaration, and the model for book-keeping management to ensure effective supervision.
The new measures are obviously favourable to the pilot enterprises. The three-month bonded storage period can further ease short-term cash flow pressure and lower operating cost. Parallel imported vehicles in China are divided into two categories for tax purposes. Import related taxes include tariff, VAT and consumption tax. Vehicles with larger than 3.0 litre engine displacement are subject to an overall tax rate of 95%, while a 67% tax rate applies to those with smaller than 3.0 litre engine displacement. The implementation of the bonded warehousing policy will save import car dealers a lot of money.
The three-month bonded period will give dealers more time to find customers and complete the necessary inspection and quarantine formalities and reduce their cash flow pressure on tax payment.