By Nick Lung      Photo: pikisuperstar

Last week, we talked about the changes in consumption patterns due to the impact of the epidemic, and introduced to you what is customs declaration, the calculation of various tariffs under different nominal import methods, and the tax exemption. This time, we are going to explain about the calculation of customs duties and the calculation basis of customs duties of the Republic of China. Each tax rate under different tariffs will have different tax rates. According to the calculation basis, each tax rate will have different tax rates under different tariffs, so that you can have a better understanding of tariffs in import operations.

* What price does the customs use as the criterion for taxation of imported goods?

For imported goods that are subject to customs duties according to their price, the dutiable value shall be calculated based on the transaction price of the imported goods. The transaction price refers to the price actually paid or payable for the imported goods sold from the exporting country to the Republic of China.

1. Tariff: Tax is levied according to the tariff rate stipulated by the customs import tariff of the Republic of China. There are three ways of levying:

        1. Specific tax - The levy of duties on imported goods is calculated according to the quantity (including weight or volume, etc.) and the duty-paid amount per quantity unit. The formula is: tariff = unit duty paid × quantity.

       2. Ad valorem duty - the levy of duties on imported goods, calculated on the basis of their prices and tax rates. The formula is: tariff = dutiable price × tax rate. Generally, imported goods are mostly subject to ad valorem duties.

       3. Compound tax - in the same tax number, the ad valorem tax rate and the specific unit tax paid amount are listed side by side, and the higher tax rate is adopted.

2. Promotion trade service fee: multiply the dutiable value of goods by 0.04%. (Note: The promotion fee is exempted below 100 yuan)

3. Excise tax: the dutiable value plus the customs duty multiplied by the excise tax rate; items that are not subject to excise tax as stipulated in the Excise Tax Ordinance are exempt.

4. Business tax: The duty-paid value is multiplied by 5% after adding customs duty, excise tax or tobacco and alcohol tax, and tobacco health welfare contribution

＊How is the import tax calculated?

Most of the taxes and fees on imported goods in the Republic of China include import tax and business tax, which are calculated as follows:

Taxes = Import Tax + Sales Tax

import duty = dutiable value x import duty

Business tax = (dutiable value + import tax) x business tax rate 5%

*Note: Dutiable Value (DPV) = Free On Board (FOB) + Freight (F) + Insurance (I) + Promotion trade service fee

For example, today Mr. Lin intends to import washing machines from the United States to Taiwan. The price of this shipment is US$50,000, the shipping fee is US$5,000 and the insurance fee is US$75.

The dutiable value of this shipment is (50,000+5,000+75) x 32 (current exchange rate) = NT$1,762,400

Import duty = 1,762,400 x 3% = TWD 52,872

Sales tax = (1,762,400+52,872) x 5% = NTD 90,764

Promotion trade service fee = 1,762,400 x 0.04% = NTD 705

The tax for the imported washing machine for this is TWD 90,764 + TWD 52,872 + TWD 705 = TWD 144,341

＊Different products will have different taxation standards

Below is the tax rate table of the above-mentioned Mr. Lin imported washing machines. It can be known that the duty-paid value of imported washing machines from the United States is classified in the Column I for 3%

Figure 2 is the tax rate table for imported stackers, the import tax rate from the United States is 10% of the dutiable value

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