In recent years, with the increasing attention of the customs to the tax source of royalties, the policies related to royalties are also constantly adjusted. Announcement No. 58 specifies the specific matters of royalty declaration. When filling in the customs declaration form, the taxpayer shall fill in the column "confirmation of payment of royalties" to confirm whether there are taxable royalties. For taxable royalties, fill in "yes" in the column of "confirmation of payment of royalties". If the royalty payment amount can be confirmed in the declaration process, the specific amount shall be declared in the "miscellaneous expenses" column of the customs declaration form; If the payment amount cannot be confirmed in the declaration process, the declaration and tax payment procedures shall be handled with the customs in the way of "subsequent taxation of royalties (code 9500)" within 30 days after the actual payment of royalties.

Are Royalty subject to customs tax?

Customs and tax authorities have very different perspectives on royalties. From the perspective of customs, once royalties are considered to be related to imported goods and constitute conditions for domestic sales, royalties are considered to be part of the import price of goods and need to be incorporated into the import price of goods to pay import tariff, import value-added tax and import consumption tax. From the perspective of domestic tax, royalties are regarded as a simple transfer of intangible assets in China, which has nothing to do with imported goods.

So after pay the domestic tax according to the regulations, customs clearance will be finished smoothly.

More information about royalty fee, pls don't hesitate to contact us,thanks!

Remark:reprinted in <China Customs magazine>