China's Import Tax Exemption for Key Cotton-Spinning Components

China's Ministry of Finance recently announced the exemption from import tariffs and value-added taxes (VAT) for imports of key components belonging to four kinds of cotton-spinning machines, making relevant Chinese enterprises the biggest beneficiary.

According to China National Textile and Apparel Council (CNTAC), the exemption from import tariffs and VAT covers all equipment urgently needed for China's cotton-spinning enterprise restructuring, such as blowing-carding units with output ≥ 150 kg/hr, ring spinning frames with 20,000 revolutions/minute, roving frames with highest 1,500 revolutions/minute, and combing machines with grip ≥ 400 times/minute.

Domestic enterprises have successfully developed and achieved volume production of such equipment, but some of their key components, such as card fillets, pneumatic cradles, plate-spring cradles, cylinders and top combs, are still mainly imported from abroad.

The exemption for such components, showing China's support for domestic enterprises to accelerate R&D and production of efficient and modern textile machines, can both lower the costs of mainframe manufacturing enterprises and lighten the burden of textile enterprises.

It is reported that the material benefit for mainframe manufacturing enterprises is the cancel of import tariffs, and the VAT on them can be offset after levied.

Now, most China-made combing machines with no less than 400 grips/minute need to be equipped with imported cylinders and top combs.

It is indicated that those eligible to such tax exemption are domestic textile-machine manufacturers who develop and have applied for intellectual property in Chinese mainland, excluding solely foreign-owned enterprises in the country.