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New Value-Added Tax Cut Helps Lowering Wine Import Cost

March 28, 2019

 

In order to boost the tightening economy and sustain an economic growth targeted between 6% to 6.5% in 2019 (China achieved 6.8% GDP growth in 2018), with effect from April 1, 2019, China will further decrease the Value-added Tax (VAT) rate from 16% to 13%, this is in shorter than a year since last May, when the VAT was reduced 1% from 17% to 16%.

 

This VAT cut will have slight help to wine importers but very little (if not none) to the end-user wine consumers.

 

Below are the tables to show how much are the savings in respect to different categories

 To those countries (New Zealand, Chile, Georgia and Australia) have entered Free-Trade Agreement with China (i.e. who benefits “zero” customs duty), the saving is even larger:

A calculation example is shown below:

 

Under the new adjusted VAT rate, a Chinese importer now pays the aggregate tax (which includes customs tariff, consumption tax and value-added tax) effective April 1, 2019, for a bottle of French Bordeaux wine with a CIF price of €5.00 per bottle:

 

€5.00 per bottle (CIF price) x 43.13% = €2.16

 

which is an 8.1% saving on tax or €0.19 per bottle in comparing to the original tax rate charged at 46.93% or €2.35 per bottle.

 

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