I.        Scope

Vessel tonnage tax shall be paid on vessels that enter the domestic ports of the People's Republic of China from overseas ports (hereinafter referred to as “taxable vessels”)

II.       Tax Rate

The tonnage tax rates shall be classified into preferential tax rates and general tax rates.
1.        Preferential tax rates:

a. Taxable vessels of the nationality of the People’s Republic of China

b. Taxable vessels of the nationality of any other country (or region) that has signed with the People’s Republic of China an agreement or treaty containing a reciprocal most-favored-nation treatment clause for vessel taxes and duties.

2.        General tax rates:

General tax rates shall apply to all other taxable vessels

III.      Tax Calculation

Vessel tonnage tax shall be collected on the basis of the net tonnage of a vessel and the term of the vessel tonnage certificate. Net tonnage refers to the net tonnage indicated on the vessel tonnage certificate issued by the government of the vessels of the nationality of the country or region. When a person in charge of a taxable vessel declares taxes, he or she may apply for a tonnage tax license for a specified term according to the Table of Taxable Items and Tax Rates for Tonnage Tax. The formula is:
Vessel Tonnage Tax = Net Tonnage of a Vessel x Applicable Tax Rate (yuan)
* Tugs and non-motorized barges pay taxes at 50% of the same net tonnage rate

IV.      Preferential Policy

1.  Direct Preferential Policy. The following vessels shall be exempt from vessel tonnage tax

a. Vessels with a taxable amount of 50 yuan or less;

b. Empty vessels that enter the port for the first time and whose ownership is obtained from overseas by means such as purchase, donation or inheritance;

c. Vessels that do not carry goods or passengers within 24 hours after the tonnage tax expires;

d. Non-motorized vessels (not including non-motorized barges);

e. Fishing and breeding vessels;

f. Vessels with papers from the local port authorities to take refuge, undergo repairs, suspend service or be disassembled and not to carry goods or passengers for the time being;

g. Vessels exclusively used or requisitioned by the army or armed police forces, police vessels;

h. Vessels of foreign embassies and consulates in China, representative offices of international organizations in China and their related personnel that should be exempted from vessel tonnage tax according to the law;

i. Other vessels prescribed by the State Council.

2. Extension Preferential Policy. During the period of the vessel tonnage license, if the taxable vessel has one of the following circumstances, the customs shall extend the period of the vessel tonnage license according to the actual days:

a. Evacuation, epidemic prevention, isolation, repair, transformation, vessels that do not carry goods or passengers

b. Vessels requisitioned by the army and armed police forces.