Key points
- Import duty = dutiable value × duty rate (for ad valorem duty); the dutiable value is generally based on the transaction price, including freight and insurance up to unloading at the place of import into China.
- Import VAT = (dutiable value + duty + consumption tax) × VAT rate; consumption tax, anti-dumping duty and similar charges are calculated as well where they apply.
- Each fee is first estimated, then recorded at actual, and allocated to inventory cost by lot, quantity or value.
In practice
The margin on bulk imports is often eroded by costs nobody sees coming. The contract was costed on the goods price alone, then port demurrage, extended storage, inspection fees, agency fees and L/C and import financing charges arrive one after another, and only at the end does it become clear that costs have overrun. Managing the two taxes and nine fees means estimating each shipment’s landed cost before signing, recording actual fees item by item during execution, and assigning them accurately to lots at settlement.
The difficulty is that fees arise at different times and on different documents: some per bill of lading, some per container, some per tonne, and some shared across several shipments and needing a reasonable allocation basis. Differences between estimates and actuals must also be reversed and adjusted promptly; otherwise inventory cost and gross margin are distorted.
How Tranexio supports it
Tranexio maintains the two taxes and nine fees through fee items and fee templates. Each fee can be estimated, recorded at actual and allocated to lots as cost; landed costs flow automatically into inventory costing and show up in order profit and loss. See Treasury and settlement and Finance-business integration.