New Policy Rolled Out: Preferential Policies for Imported Printing Equipment in 2010

In 2009, under the unfavorable circumstances of the global financial crisis, the relevant state departments formulated a number of favorable policies conducive to the import of high-tech printing equipment; in particular, the preferential policies on the reform of VAT transformation and the substantial reduction of import tariffs effectively promoted the import of printing equipment into China. So what favorable policies can the import of printing equipment enjoy this year? The new policies introduced this year mainly consist of establishing or adjusting temporary tax rates for certain high-tech equipment to substantially reduce import tariffs; second, some policies introduced in recent years can still continue to be applied. The main new and recent favorable policies are summarized as follows:

1. Expanding the scope of temporary tax rates and substantially reducing import tariffs

In order to introduce high technology, the Tariff Commission of the State Council issued the 2010 Tariff Implementation Plan (Tariff Commission [2009] No. 28) on December 16, 2009, announcing that from January 1, 2010, China would further adjust the import and export tariff schedules and rates. More than 600 import tariff rates (temporary tax rates) were lowered, among which 17 kinds of printing equipment and parts were subject to temporary tax rates. Seven types of printing equipment were newly added and their import tariffs were lowered. Added: (1) a temporary tax rate of 4% for the curved tube of paper cutting machines, a reduction of up to 50% compared with the original most-favored-nation rate of 8%;

Under tariff code 84431313 for four-color sheet-fed offset presses with a printing speed of 16,000 folio sheets/hour or more, there were added (2) folio sheet-fed double-sided printing with a speed of 13,000 sheets/hour or more, and (3) a temporary tax rate of 7% for full-sheet or super-full-sheet sheet-fed offset presses with a single-sided printing speed of 13,000 sheets/hour or more, a reduction of up to 30% from the original 10% rate; under tariff code 84431319 for five-color and above sheet-fed offset presses with a speed of 16,000 folio sheets/hour or more, there were added (4) folio sheet-fed double-sided printing with a speed of 13,000 sheets/hour or more, and (5) a temporary tax rate of 7% for full-sheet or super-full-sheet sheet-fed presses with a single-sided printing speed of 13,000 sheets/hour or more, a reduction of up to 30% from the original 10% rate;

Newly added: (6) a temporary tax rate of 5% for narrow-web flexographic presses of the in-line type with hot stamping, holographic or screen printing functional units (linear speed >160 m/min, 250 mm ≤ web width <800 mm), a reduction of up to 50% from the original 10% rate. Also newly added: (7) a temporary tax rate of 4% for automatic web feeding machines (linear speed >12 m/s), a reduction of up to 67% from the original 12%. The above adjustments to import tariffs on printing equipment have increased the number of items enjoying the preferential temporary tax rate policy (tariff reduction).

Second, the specified items are clear and detailed, in line with the purpose of developing high-tech printing, and relatively easy to handle in practical work. In past documents it was often provided only that folio four-color offset presses could enjoy preferential policies, yet when a printing enterprise in Zhejiang imported a five-color offset press, the local customs said that five-color offset presses could not enjoy preferential policies. At the same time, past documents only provided that folio multi-color offset presses with a printing speed of 16,000 sheets/hour or more qualified, but did not specify the speed of double-sided four-color (eight-color) offset presses (such as the printing speeds of eight-color offset presses using different printing methods from Japan's Akio, Heidelberg and others. It is not very reasonable to apply the speed requirements of single-sided offset presses to double-sided offset presses).

As a result, when going through import formalities at customs, one often runs into a lot of trouble.

1. Continuing the VAT deduction

In 2009 the State Council made a decision on VAT reform: nationwide, in all industries (including foreign-funded enterprises), the purchase of domestic and foreign equipment allows a full deduction of VAT. This policy continues to be implemented this year. However, this policy differs considerably from the previous policy of exempting customs duties and VAT. The big difference is that the one-time payment when buying a machine is much larger than before. If one now wants to buy a folio four-color offset press worth USD 1 million, first a 7% (temporary tax rate) customs duty must be paid, bringing the machine price to 100X1.07 = USD 1.07 million, and then a 17% VAT must also be prepaid to customs, bringing the machine price to 107X1.17 = USD 1.2519 million.

It can be seen from this that after the preferential policies of temporary tax rates and VAT deduction are implemented, a printing enterprise buying a folio four-color offset press nominally spends only USD 1.07 million, USD 181,900 less than before the VAT reform. But the printing enterprise has to pay a one-time total of USD 1.2519 million (principal + customs duty + VAT), which is indeed a heavy burden. Especially for small and medium-sized enterprises, the full deduction of VAT will take a very long time. Second, in some places the grassroots tax departments often fail to act in accordance with the policies formulated by the state when enterprises deduct VAT, so that enterprises cannot smoothly or deduct VAT.

1. Preferential policies supporting the development of cultural enterprises

On March 27, 2009, the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation jointly issued the Notice on Several Tax Policy Issues Concerning Support for the Development of Cultural Enterprises (Cai Shui [2009] No. 31). Article 7 of the Notice points out that self-use equipment, supporting parts and spare parts which cannot be produced domestically and are imported for the production of key cultural products are exempt from import duties in accordance with the relevant provisions of current tax policies. The implementation period is from January 1, 2009 to December 31, 2013.

At the same time, item 18 of the "Scope of Cultural Enterprises" in the annex to that document includes "book, newspaper, periodical, audio-visual product and electronic publication printing enterprises that adopt high-tech and equipment such as digital printing technology, computer-to-plate technology (CTP), high-speed fully automatic multi-color printing presses and high-speed book and magazine binding lines".

However, because the definition of "key cultural products" is unclear, the scope of printing enterprises specified for cultural enterprises is rather broad, and "self-use equipment, supporting parts and spare parts that cannot be produced domestically" is also rather general; therefore there is no clear basis for implementation and it is difficult to put into practice, and as a result the favorable policies are often hard to implement, or even impossible to implement at all.

1. Preferential policies available to foreign-funded enterprises

All foreign-funded enterprises importing printing equipment can enjoy the preferential policies of VAT deduction and the application of temporary customs duty rates. At the same time, printing equipment imported without compensation provided by foreign investors of processing trade enterprises, as well as the technology, supporting parts and spare parts imported along with the above equipment under contract, continue to be exempt from customs duties within the originally prescribed scope.

Second, for encouraged foreign investment projects such as "folio and full-sheet multi-color sheet-fed offset presses with a printing speed of more than 16,000 or 13,000 folio sheets/hour, and web offset presses with a printing speed of more than 75,000 folio sheets/hour", the self-use equipment they import may also be exempt from customs duties.

In addition, according to Order No. 4 of [2008] jointly issued by the National Development and Reform Commission and the Ministry of Commerce, the Catalogue of Advantageous Industries for Foreign Investment in the Central and Western Regions, packaging and decorative printing has been included in the catalogue of advantageous industries for foreign investment in seven provinces, namely Shanxi, Anhui, Jiangxi, Henan, Hunan, Hubei and Yunnan, so that it enjoys the preferential policies for encouraged foreign investment projects, i.e. the self-use equipment it imports is exempt from customs duties.

1. Simplifying import procedures and delegating management authority

Most printing equipment imported into China consists of offset presses. For a long time the import of sheet-fed offset presses and web offset presses was very strictly controlled: they were first listed as restricted import products and later as specified products, with numerous and complicated approval procedures and long approval times; besides approval by the local administration department at the place where the enterprise applying to import printing equipment is located, one also had to go to Beijing for approval, and import licenses were issued by the Ministry of Commerce. After China's accession to the WTO, the Ministry of Commerce and the General Administration of Customs jointly issued documents, successively changing 11 catalogued products including web offset presses and sheet-fed offset presses from specified product management to the automatic import license mechanical and electrical product catalogue management. This major change means that import licenses for imported offset presses are now issued by the mechanical and electrical product import office of the province, autonomous region or municipality directly under the Central Government where the enterprise importing the printing equipment is located, instead of by the Ministry of Commerce. In this way, management authority has been delegated, import procedures simplified, working efficiency improved, and it is more convenient for enterprises to import printing equipment.

——This article is reprinted from China Packaging Network (pack.cn), original link: http://news.pack.cn/show-362194.html