This article is intended to provide a general guide to the subject matter. Specific advice should be sought about individual circumstances. Further information or advice may be obtained from Linklaters & Paines, Hong Kong office, 14th Floor, Alexandra House, Chater Road, Hong Kong; telephone: (852) 2842 4888; fax: (852) 2810 8133; contact David Mullarkey or Jeremy Parr.

Import tariffs in the PRC are levied in accordance with tariff schedules issued by the Customs Tariffs Commission and the General Administration of Customs. Two rates are levied: a preferential rate for imports originating from countries with whom the PRC may have a bilateral trade treaty and normal rates for other countries.

The main legislation with regard to the levying of tariffs on foreign investment enterprises ("FIEs") (and there are none specific to retail joint ventures established under the Retailing Provisions or other retail FIEs) is the Measures for the Foreign Investment in Supervision and Control of the Levying and Exemption of Taxes on the Imports and Exports of FIEs. For specific tariff rates, reference should be made to the import tariff schedule in force from time to time, the most recent being that issued in December 1993 by the Customs Tariffs Commission and the General Administration of Customs as supplemented by the announcement of further reductions and tariffs in January 1995. The import tariff schedule may be obtained from the customs authorities.

There are certain exemptions applicable to FIEs, but generally, this will be restricted to production equipment, parts and materials imported as part of, or paid out from, the investment capital of the FIEs. The import of merchandise by FIEs for onselling to PRC third parties generally will not benefit from the duty free exemptions.

In practice, there may be room for the negotiation of the tariffs actually applied to the imported goods. Depending on the goods concerned, the application of the tariff categories may be ambiguous and the customs authorities may be persuaded to apply a more lenient category (attracting lower tariffs) where there is room for doubt. Often, an FTC or a PRC joint venture party will be able to negotiate better rates than would the foreign party.

Also, bearing in mind the preferential tariff rates applying to goods originating from countries with bilateral trade treaties with the PRC, selective sourcing of imports from these countries (which include also Hong Kong and Taiwan) may further reduce the tariffs payable.

For further details, see the articles headed "Import licensing in the PRC", "Commodity inspection in the PRC" and "Customs formalities in the PRC".

Further information or advice may be obtained from Linklaters & Paines, Hong Kong office, 14th Floor, Alexandra House, Chater Road, Hong Kong; telephone: (852) 2842 4888; fax: (852) 2810 8133; contact David Mullarkey or Jeremy Parr.