The State Coouncil has recently promulgated the Interim Regulations of the People's Republic of China on Vessel Tonnage Dues.

Interim Regulations of the People’s Republic of China on Vessel Tonnage Dues

Article 1 Any vessel entering into domestic ports of the People’s Republic of China from ports beyond the borders of the People’s Republic of China (hereinafter referred to as “taxable vessel”) shall be levied for vessel tonnage dues (hereinafter referred to as “tonnage dues”) in accordance with these Regulations.

Article 2 Tax items and rates for the tonnage dues shall be determined in accordance with the Schedule for Tax Items and Rates for Tonnage Dues as attached to these Regulations.

Any adjustment to the Schedule for Tax Items and Rates for Tonnage Dues shall be decided by the State Council.

Article 3 Preferential rates and general rates are set for tonnage dues.

Preferential rates shall be applicable to taxable vessels of Chinese nationality and taxable vessels the flag states (regions) of which have entered into treaties or agreements that contain clauses offering most favored nation treatment to each other’s taxes and dues levied on vessels with the People’s Republic of China.

General rates shall be applicable to other taxable vessels.

Article 4 Tonnage dues shall be levied in accordance with the net tonnage of a vessel and the term of validity of the tonnage license.

The person in charge of the vessel may, at each time he makes declaration on tax payment, choose to apply for a tonnage license with certain term of validity in accordance with the Schedule for Tax Items and Rates for Tonnage Dues.

Article 5 The tax amount payable for tonnage dues shall be calculated as multiplying a vessel’s net tonnage by the applicable tax rate.

Article 6 The Customs shall be responsible for collection of tonnage dues. Payment receipt shall be formulated and issued by the Customs when collecting tonnage dues.

After the person in charge of a taxable vessel pays the tonnage dues or provides securities, the Customs shall fill in and issue the tonnage license in accordance with the term of validity such person in charge applies.

Article 7 A taxable vessel shall, at the time of handling entry formalities for entering in to a port, make declaration on tax payment and apply to obtain the tonnage license, or submit the tonnage license for examination. A taxable vessel shall, at the time of handling formalities for leaving a port, submit the tonnage license for examination.

The person in charge of a taxable vessel shall provide the Customs with the following documents when applying to obtain the tonnage license:

(1)The certificate of the vessel’s registry or the testimonial signed and issued by the maritime authorities to testify that this certificate has been kept in their custody.
(2)The certification of the vessel’s tonnage.

Article 8 The time when the obligation arises for a taxable vessel to pay tonnage dues shall be the very day when such vessel enters into a port.

If a taxable vessel does not leave the port at the expiration of the tonnage license, such vessel shall apply to obtain new tonnage license, and the levy shall continue as of the next day of the last expiration date of the old tonnage license.

Article 9 The following vessels shall be exempted from tonnage dues:

(1)vessel with tax amount payable below 50 yuan;
(2)unloaded vessel the ownership of which is obtained by purchase, donation or inheritance beyond the borders initially enter into and arrive at a port;
(3)vessel that does not embark or disembark passengers or cargos within 24 hours after the expiration of her of tonnage license;
(4)non-motor vessel(excluding non-motor barges);
(5)fishing boat for fhising and cultivation;
(6)vessel to take asylum, under quarantine, undergo repairs, suspend service or be disassembled and not to embark or disembark passengers or cargos;
(7)vessel under exclusive use of or commandeered by army or armed police force;
(8)vessels of the foreign embassies and consulates  in China, the representative institutions of international organizations in China and their personnel, which shall be exempted from tax in accordance with the relevant provisions of law; and
(9)Other vessels as prescribed by the State Council.

Article 10 If a taxable vessel commits any of the following cases within the term of validity of tonnage license, the Customs shall annotate and comment on the extension of the term of validity of the license according to the actual number of days:

(1)vessel to take asylum, under quarantine, undergo repairs and not to embark or disembark passengers or cargos;
(2)vessel commandeered by army or armed police force;

If a taxable vessel, for the sake of force majeure, berths at a place where no Customs is set up, the person in charge of such vessel shall immediately report to the nearby Customs, and make declaration on tax payment to the Customs in accordance with provisions of these Regulations after the force majeure disappears.

Article 11 In the event of any of situations as provided for in Article 9(5) to Article 9(8) and Article 10 of these Regulations, basis and reasons for exemption of the tonnage dues or extension of the term of validity of the tonnage license shall be stated by providing legally effective documents or documents testifying utilization relation issued by such departments or authorities as maritime authorities, fishery and vessel administration departments or health inspection and quarantine departments, etc.

Article 12 The person in charge of a taxable vessel shall pay the tonnage dues to the designated bank within 15 days from the day on which the Customs fills and issues the Tonnage Dues Payments Note. In the event of failure to pay the tonnage dues within such time limit, a fine in amount of 0.5‰ of the delayed payment shall be surcharged for every day in arrears, starting from the day of default.

Article 13 Where a taxable vessel has, under the examination and approval of the Customs, made the declaration in advance and handled the entry and exit formalities before arriving at a port, the person in charge of such taxable vessel shall provide the Customs with securities that are commensurate with his obligation of paying tonnage dues in accordance with law, and make declaration on tax payment to the Customs in accordance with these Regulations after such vessel arrives at the port.

The following properties and rights may serve as securities:

(1)RMB or free convertible currencies;
(2)Bills of exchange, promissory notes, cheques and certificate of deposit;
(3)letter of guarantee issued by a bank or a non-banking financial institution; and
(4)other property and rights approved by the Customs in accordance with law.

Article 14 Where the net tonnage of a taxable vessel changes within the term of validity of the tonnage license due to repairs, the tonnage license shall continue to be effective. When handling entry and exit formalities, such taxable vessel shall provide document(s) testifying that the vessel has undergone repairs.

Article 15 Where the applicable rate for a taxable vessel is changed within the term of validity of the tonnage license due to adjustments of tax items and rates, or due to alteration of such vessel’s nationality, the tonnage license shall continue to be effective.

Where the applicable rate is changed due to alteration of the taxable vessel’s nationality, such vessel shall provide document(s) testifying such alteration of nationality.

Article 16 Where the tonnage license is defaced or lost before expiration of the same, a written application shall be made to the original license-issuing Customs for a copy of the tonnage license. No further payment is required.

Article 17 Where the Customs finds that the dues are short-levied or not levied, it shall collect the money payable within one year of the previous dues payment. However, if the short-levied or non-levied dues are attributable to the taxable vessel’s violation of regulations, the Customs may collect the unpaid amount from such vessel within three years, and a fine in amount of 0.5‰ of dues short-levied or not levied shall be surcharged for every day in arrears, starting from the day on which the dues are short-levied or not levied.
Where the Customs finds that the dues are over-levied, it shall immediately notify the taxable vessel to handle formalities for refunding the money, plus interest on current deposit of the same period.

Where the taxable vessel finds that the dues are over-paid, it may, within 1 year from the day on which the dues are paid, make a written application to the Customs requiring refunding of the over-paid dues, plus interest on current deposit of the same period; the Customs shall, within 30 days from the day of acceptance of the refunding application, examine and verify the same as well as notify the taxable vessel to handle formalities for refunding the money.

The taxable vessel shall handle relevant formalities for refunding within 3 months from the day of receipt of the notices as provided for in paragraph 2 and 3 of this Article.

Article 18 Where a taxable vessel commits any of the following acts, it shall be ordered by the Customs to rectify, and a fine of not less than 2,000 yuan but not more than 30,000 yuan shall be imposed; where such vessel did not paid or short-paid the payable dues, fine of not less than 50% but not more than five times of the dues that are not paid or short-paid shall be imposed, provided that such fine shall be not less than 2,000 yuan:

(1)fail to make declaration on tax payment or obtain the tonnage license as required;
(2)fail to submit the tonnage license and other testifying documents for examination as required.

Article 19 Tonnage dues, surcharged fines and fines shall be calculated in RMB.

Article 20 For purpose of these Regulations:

Net tonnage is refereed to the net tonnage as prescribed on the certificate of vessel’s tonnage authorized and issued by the government of the state (region) of registry.

Non-motor vessel is referred to vessel without self-propelling plant thus shall be propelled by external force.

Non-motor barge is referred to non-motor vessel registered in the vessel administration departments as barge.

Fishing boat for fishing and cultivation is referred to vessel registered in the fishery and vessel administration department as fishing boat or cultivating boat.

Tug is referred to special operating vessel that is exclusive for towing (pushing) transport vessel. Net tonnage of tug shall be calculated in accordance with the power of tug’s engine, and 1kw shall be converted into 0.67 net tonnage.

Term of validity of tonnage license is referred to time period calculated by the year and the day in the Gregorian calendar.

Article 21 These Regulations shall be effective as of January 1, 2012. The Interim Measure of the People’s Republic of China Concerning Vessel Tonnage Dues approved by the Financial and Economic Committee of the Government Administration Council on September 16, 1952 and promulgated by the General Customs Administration on September 29, 1952 shall be repealed simultaneously.

Attachment:

Schedule for Tax Items and Rates for Tonnage Dues

Tax items (divided in accordance with vessel’s net tonnage )	Tax rate (yuan per net tonnage)						Remarks
	General rate (divided in accordance with the term of validity of the tonnage license)			Preferential rate (divided in accordance with the term of validity of the tonnage license)
	1 year	90 days	30 days	1 year	90 days	30 days
Up to 2,000 net tonnage	12.6	4.2	2.1	9.0	3.0	1.5	Levy on tugs and non-motor barges shall be calculated in accordance with 50% of those tax rates applicable to vessels of the same net tonnage.
More than 2,000 but not more than 10,000 net tonnage	24.0	8.0	4.0	17.4	5.8	2.9
More than 10,000 but not more than 50,000 net tonnage	27.6	9.2	4.6	19.8	6.6	3.3
More than 50,000 net tonnage	31.8	10.6	5.3	22.8	7.6	3.8