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Shippers Seek Clarification From US on China's VAT

The National Industrial Transportation League is asking the federal government to find out how China's recently implemented value-added tax on freight transportation relates to international cargo movements.

Although China said the 6 percent VAT, imposed Aug. 1, applies to domestic shipping, logistics and forwarding in China, there is confusion on how it applies to international freight traffic, NITL President and CEO Bruce Carlton wrote in letter to the Department of State, the Federal Maritime Commission and the Maritime Administration. Despite NITL's belief that the VAT doesn't apply to international freight, there have been reports of ocean carriers and non-vessel-operating common carriers charging shippers for the VAT via surcharges or service charges.

"In general, there appears to be widespread confusion over the application of the new VAT enacted by the PRC, as well as its implementation by service providers," Carlton wrote. "This is clearly generating considerable market uncertainty for shippers not only in the region but here in the U.S. as well."

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