China said June 15 it would lower taxes on imported cars and auto parts from July 1 after the EU and the U.S. lodged a complaint at the World Trade Organization (WTO) on the issue. "In accordance with our commitments to cut tariffs upon accession to the WTO, our nation will take steps to cut import taxes on auto parts from July 1," the ministry of finance announced on its website.
Tariffs on imported auto parts will be lowered to 10% from the current rate of 13.8-16.4%, the ministry said. Taxes on imported cars will be cut from 28% to 25%.
China had been levying dual taxes on imported auto parts when domestic car makers failed to meet a 70% local content requirement, according to a March 30 statement on the U.S. Trade Representative's website. "China's taxes on imported auto parts discourage automobile manufacturers in China from using imported auto parts in the assembly of vehicles," the statement said.
"In its WTO accession agreement, China expressly committed to eliminate all local content requirements and to lower and bind its tariffs on auto parts," according to the website.
China said the added tariffs were aimed at curbing tax evasion by some foreign automakers who allegedly avoid paying customs duties on whole cars by disassembling them before import and then reassemble them after they enter the country, Xinhua news agency said.
Copyright Agence France-Presse, 2006