Exporting to China

Taxes, duty and legal considerations when exporting to China

There are a lot of things to consider before you start exporting to China. It's essential to find out about local rules and regulations on tax and duty in your intended market.

Entering the Chinese market

Companies often take a staged approach to setting up in China. Many start by exporting a small amount to test the market.

The main options for entering the Chinese market are:

  • using agents or distributors
  • establishing a presence in China through either setting up a Wholly Foreign Owned Enterprise (WFOE) company, opening a representative office or working with a partner through a Joint Venture
  • exporting directly
  • e-commerce
  • licensing and franchising
  • using a UK-based consolidator/exporter
  • using a business incubator in China allowing a year round presence on the ground

Legal considerations

China has what is officially termed ‘a socialist legal system with Chinese characteristics’. The legal system is based on both statutory law and custom.

You must identify whether the market is open to you and whether restrictions apply. In some sectors it is possible to set up a 100 per cent foreign-owned company. In others entry is possible only through a local partner.

Standards and technical regulations

The Standardization Administration of the People’s Republic of China has responsibility for standards. China sets its own national standards. These are often referred to as ‘GB standards’ with some mandatory and others voluntary.

Not all Chinese standards are aligned with established international standards. It is important to check the Chinese laws, regulations, standards and certification requirements that apply to your area of business.

Goods for sale in China must be labelled in Chinese. For some products, information must be printed directly onto the packaging. You should always check the labelling requirements for your products.

Intellectual Property (IP)

It is essential to know how to use, guard and enforce the rights you have over the IP that you or your business own. As part of your market entry strategy you must:

  • establish how you can protect your rights
  • find out about costs
  • monitor the market for possible infringement

China uses a ‘first-to-file’ system for trademarks. You may lose legal protection if a similar mark has already been registered within China. Therefore, you must register your trademarks in China before entering the market.

Read more about intellectual property rights in China.

Tax and customs considerations

The UK has double taxation agreements in place with China.

Value Added Tax (VAT)

VAT is charged on the sales and import of goods as well as processing, repair and replacement services. There are exemptions for the import of certain goods identified in relevant regulations.

The basic VAT rate is 17 per cent, but a lower rate of 13 per cent is levied on a number of goods.

When selling internationally there are different VAT rules depending on whether you are buying or selling goods or services within or outside the EU. Use our VAT rules when selling internationally tool.

Consumption tax

14 categories of goods are subject to consumption tax. The rate is calculated based on price and is between 1 per cent and 56 per cent.

Corporate tax

Taxes applicable to a Foreign Invested Enterprise (FIE) include:

  • The EU SME Centre provides information on Enterprise Income Tax in China.
  • All service companies obtaining income in China or with consumers located in China are subject to Chinese taxes, unless exempted expressly by Chinese regulations.

Income tax

Individual income tax is charged between 5 per cent and 45 per cent.

Customs considerations

The General Administration of Customs of the People’s Republic of China provides information on customs procedures and tariffs.

You can find more about import tariffs in the Market Access Database.

Entry requirements

You should obtain a visa to enter mainland China before arrival. You can find details of visa requirements on the Chinese embassy website.