Tax Newsflash｜US-China Export Controls and Maritime Port Fees

On 29 September, the U.S announced the "50% ownership-based affiliates rule" to expand its export control regime. Under this rule, entities at least 50% owned by parties on U.S. restriction lists would inherit the same export license requirements. If entities were owned by multiple parties subject to different licensing requirements, the most restrictive rule would apply. Exporters, when aware of transaction parties held by those on the restriction lists, would be required to verify the ownership stake held by such listed entities.

In response, China on 9 October imposed export control measures on commodities, equipment, and technologies pertaining to rare earth, semiconductors, superhard materials, and lithium batteries, etc. Key provisions include the denial of license for shipments to entities 50% or more owned by those on China’s control lists. Exports to military end-users or for (potential) military applications would generally be prohibited, with case-by-case reviews for specific end uses linked to semiconductors, military-applicable artificial intelligence, etc.

The U.S. implemented port fees on 14 October targeting Chinese maritime interests. Fees would apply to 1) vessels owned/operated by Chinese entities ($50/net ton), 2) Chinese-built vessels (higher of $18/net ton or $120/container), and 3) foreign-built vehicle carriers ($14/net ton). The charge for category 1&2 would be subject to the phased increase over the next three years and annually up to five times per vessel.

China retaliated with special port fees on designated vessels, mainly including those owned/operated by U.S. entities or individuals or built in the U.S. Fees start at RMB 400/net ton, rising to RMB 1,120 by 2028, assessed per voyage at the first Chinese port of call, capped at five times annually. 

Authors：

Dolly Zhang

Partner

+86 21 6141 1113

dozhang@deloittecn.com.cn

Michael Wu

Director

+86 21 2312 7198 

michaelzwu@deloittecn.com.cn

Ted Chen

Manager

+86 21 6141 1886

tedchen@deloittecn.com.cn

For more information, please contact:

Indirect Tax Services

National Leader

Lily Li

Partner

+86 21 6141 1099

lilyxcli@deloittecn.com.cn

Customs & Global Trade Services

National Leader

Dolly Zhang

Partner

+86 21 6141 1113

dozhang@deloittecn.com.cn

Eastern China

Candy Tang

Partner

+86 21 6141 1081

catang@deloittecn.com.cn

Northern/Western China

Marilyn Lu

Partner

+86 10 8520 7668

marilynlu@deloittecn.com.cn

Southern China

Janet Zhang

Partner

+86 20 2831 1212

jazhang@deloittecn.com.cn

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