China's Import-Tax Breaks for Chinese "Flag-of-Convenience" Ships

To local provincial and municipal bureaus of finance and state taxation, Guangdong Sub-Administration of China Customs, and local customs directly under the General Administration of Customs of China:

With approval by the State Council of China, the import taxation policies for Chinese-funded ships hanging "flags of convenience", which return to China for their registration, may prolong to the end of China's "Twelfth Five-Year Plan" period.

Relevant matters are hereby announced below:

1. Exemption from tariff and import value-added tax (VAT) shall be applied to the declared imports of Chinese-funded ships hanging "flags of convenience" during July 1, 2011 to December 31, 2015, which are already registered abroad before December 31, 2005, compliant with specified age and technical conditions and funded by Chinese at no less than 50% capital.

Importers of such ships may choose any China's port of registry to take registration of their ships as per the Regulations of the P. R. China on Registration of Ships (Decree No. 155 of the State Council) and other relevant regulations.

2. The following are age ranges specified for kinds of importing ships under such tax preferences:

The age of four (4)-twelve (12) years shall apply to oil tankers, chemical tankers, liquefied gas ships, and so on;

The age of six (6)-eighteen (18) years shall apply to bulk ships, ore ships, and so on;

The age of nine (9)-twenty (20) years shall apply to container ships, general-cargo ships, general-purpose ships, liquefied-petroleum-gas carrying ships, bulk-cement carrying ships, and so on.

The ages aforesaid shall refer to the duration from any completion date of shipbuilding till the date of July 1, 2007.

Additionally, all the ships enjoying the tax preferences shall be compliant with relevant requirements on the import of old/obsolete ships.

3. The importers may apply to the Ministry of Transport of China prior to March 1 each year during the "Twelfth Five-Year Plan" period (specific procedures and requirements shall be formulated by the Ministry of Transport).

After its preliminary examination, the Ministry of Transport shall report to the Ministry of Finance;

Upon joint approval by the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation, any eligible importing ships may be delivered by the importers to relevant China Customs authorities for conduct of tax deduction and exemption.