China To Slash Vehicle Import Taxes As Condition Of WTO Entry

by Mary Swire, Tax-News.com, Hong Kong

06 December 2001

China is to slash its vehicle import taxes from January 1st 2002 as a condition of accession to the World Trade Organisation.

The country, which is due to join the international trade association on December 11th, will be cutting import taxes on vehicles with engine capacities of three litres or less from 70% to 48%, said the Ministry of Foreign Trade and Economic Co-operation. For cars with engines larger than three litres, the tariff will be cut from its present rate of 80% down to 50.7%.

Under the terms of its accession agreement, China has pledged to cut vehicle import taxes to 25% by mid-2006, to increase import quotas incrementally each year, and to abolish the quotas completely in 2005.

Recent reports have suggested that many Chinese citizens have been holding off from buying new cars in anticipation of lower prices following WTO entry, and the country's domestic car manufacturing industry, which comprises more than 100 authorised producers, has braced itself for a shake-out as a result of increased competition in the new year.

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