Circular of the State Council on Policies for Reform and Adjustment of Import Tax

Circular of the State Council on Policies for Reform and Adjustment of Import Tax
Circular of the State Council on Policies for Reform and Adjustment of Import Tax

Guo Fa [1995] No.34

December 26, 1995

The People's Government of each Province, Autonomous Region, and Municipality Directly under the Central Government, Ministries, Commissions and Departments under the State Council:

A series of preferential policies on import duties have been formulated since the Third Plenary Session of the 11th CPC National Congress in order to further the opening to the outside and promote the development of the national economy. These have played an important role in expanding foreign trade, attracting foreign investment and introducing advanced technologies. However, with the deepening of reform and opening to the outside and the gradual establishment of the socialist market economic system, the contradictions between those policies and international general practices as well as the principle of fair competition in the market economy have become more and more obvious. In recent years, the State Council has streamlined and adjusted some of the regulations regarding import duty reductions and exemptions, lowering the general level of import duties from 42% to 35.9%. Generally speaking, however, the problem of high tax rates, too many reductions and exemptions and a low tax base is still very serious. Various kinds of tax reductions and exemptions have given rise to unfair competitions among different regions and different enterprises, which is harmful both to the conversion of operational structures by State-owned enterprises and to the coordinated economic development among different regions.
It is imperative to accelerate the reform and adjustment of import duty policies. We must further lower the general level of import tariff, cancel excessive unfair import duty reduction and exemption regulations. We must establish unified, standard, fair, reasonable import duty policies based on the demands of socialist market economy and international general practice so as to participate in international competitions and international economic cooperation in a more open manner and to promote the development of the national economy. We hereby notify you of the relevant issues as follows:

I. Greatly Decrease Our Country's General Level of Import Tariff
Based on the demands of the development of China's national economy and the market, in consideration of the effect on the Central Government's revenue and the bearing capabilities of the country's industries, gradually lower the general level of import tariff of the country to the average level of that of the developing countries under the precondition that it will be favorable to the adjustment of the industrial structure and the rationalization of the tariff structure.
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