(1) Duty payers

The payers of Customs Duties include consignees who import goods permitted by China and consignors who export goods permitted by China, the former shall pay import duties and the latter shall pay export duties.

(2) Tariff rates

The tariff rates include import duty rates and export duty rates. The tariff rates for imports fall into two categories; general tariff rates and preferential tariff rates. The general tariff rates apply to the imports originating in the countries with which the People's Republic of China has not concluded most-favoured-nation trade agreements; the preferential tariff rates apply to imports originating in the countries with which the People's Republic of China has concluded most-favoured-nation trade agreements. In 1999, there are 6, 940 tariff numbers for imported goods in the Classifications.

The general tariff rates for importation range from 0%, 8% to 270% with over 20 different rates. The preferential tariff rates vary from 0% , 1 % to 121.6% with over 50 different rates, and the arithmetic average rate is 16.8%. A small number of imported goods are subject to duties on quantity, compound, or sliding basis. There are 36 tariff numbers for exported goods subject to Duties with 5 differential rates ranging from 20% to 50%.

(3) Computation of duty payable

Customs Duty is computed either on ad valorem basis and by applying an applicable rate or on quantity basis and by applying amount of duty per unit.

The formula is:

a. Duty payable = Quantity of imported/exported goods x Tax-inclusive price x Rate

or

b. Duty payable = Quantity of imported/exported goods x Amount of duty per unit

(4) Major reductions and exemptions

a. The following goods may be exempted from Customs Duties upon verification by the Customs: the duty amount to be paid for one consignment of goods below RMB 10 yuan; advertising matter and trade samples of no commercial value; goods gifted by international organizations or foreign governments; and fuels, stores and beverages loaded on a means of conveyance entering or leaving the country for use en route.

b. Duty reduction or exemption shall be given to goods and articles specified as duty reduction or exemption items by international treaties to which the People's Republic of China is either a contracting or an acceding party.

c. Raw materials, subsidiary materials parts, accessories, components and packing materials imported for overseas businesses to process, assemble or produce export-oriented products shall be exempt from duties on the part of actually processed and exported; or duties are collected first on the imported materials and parts and then refunded on the basis of the completed products actually processed and exported.