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FORUM - Closer Economic Partnership Arrangement (CEPA)

CEPA Entity

03 Aug 2012 09:24

We are a U.S. company plans to export premium roasted coffee and green coffee from El Salvador to China.  Can we set up a wholly-owned subsidiary of a CEPA entity in Hong Kong for the foregoing purpose?  If it is allowed, is there any advantage?  What are the import duty and VAT applicable taxes?  Thank you for any information HKTDC could provide in this matter.

Post 1 of 5

10 Aug 2012 14:53

1

To set up a company in Hong Kong, you may like to contact Invest Hong Kong (http://www.investhk.gov.hk/index.html) which offers free assistance to overseas companies or foreign investors to set up a company in Hong Kong. For the purpose of claiming zero tariff preference under CEPA, Hong Kong and the Mainland have agreed on a set of preferential CEPA Rules of Origin. A product must comply with the CEPA Rules of Origin in order to be claimed as Hong Kong origin to enjoy zero tariff treatment when exported to the Mainland under CEPA. Since the implementation of CEPA, Hong Kong and the Mainland have reached agreement on the rule of origin for goods covered by a total of 1,739 Mainland 2012 tariff codes http://www.tid.gov.hk/english/cepa/tradegoods/trade_goods.htm. For roasted coffee (serial no.160, Mainland tariff code 09012100), the Rule of Origin: (1) Manufactured from coffee beans. The principal processes are roasting and grinding. If mixing is required, it must also be done in Hong Kong; or (2) (a) Manufactured from coffee beans. The principal process is roasting; and (b) to fulfill the value-added content requirement. Costs of local labour, product development costs incurred in Hong Kong, and raw materials and component parts originated in Hong Kong can be counted towards the value-added content under the CEPA Rule of Origin. With the signing of the CEPA Supplement VIII, the scope of raw materials and component parts has been expanded to include those originated from the Mainland to accumulate in the calculation of the value-added content since 1 April 2012. Details of the requirements for including values of the raw materials and component parts of Mainland origin have been set out in Certificate of Origin Circular number 2/2012 which can be downloaded from TID's CEPA website (http://www.tid.gov.hk/english/aboutus/tradecircular/all_in_one/2012/as012012.html).  

Post 2 of 5

17 Aug 2012 08:50

Thank you, Johnathan, for your informative explanation.  On Monday, Aug 31, we shall be holding a telephone conference with my associates in Texas and South America about the setting up of a wholly-owned CEPA subsidiary.  I would like someone who could provide current or spot indicative prices CIF Hong Kong of premium roasted coffee beans of Colombian, Brazilian and Mexican origin.

Post 3 of 5

19 Dec 2012 16:10

Please note that only roasted coffee, not decaffeinated (classified under HS 09012100) imported from Hong Kong to the mainland are afforded with duty free entry under CEPA with the following criteria:  (1) Manufactured from coffee beans. The principal processes are roasting and grinding. If mixing is required, it must also be done in Hong Kong; or (2) (a) Manufactured from coffee beans. The principal process is roasting; and (b) to fulfill the value-added content requirement.

 

However import duties of  of other types of coffee under HS nos. 09011100, 09011200,09012200 09019010, 09019020 exported from HOng Kong to the mainland remain 8% to 30%.

Post 4 of 5
Moderator

03 Sep 2013 15:25

To further enhance the level of economic and trade exchanges and cooperation between the Mainland China and the Hong Kong Special Administrative Region the two sides

agreed to sign this Supplement X on further liberalization of trade in services in the Mainland for Hong Kong, strengthening cooperation in the areas of finance, and trade and investment facilitation.
From 1 January 2014, the Mainland shall further relax the market access conditions in 28 areas, namely, legal, construction, computer and related services, real estate, market research, technical testing and analysis services, placement and supply services of personnel, building-cleaning, photographic, printing, convention and exhibition, translation and interpretation services, telecommunications, audiovisual, distribution, environment, banking, securities, hospital services, social services, tourism, cultural, sporting, maritime transport, air transport, road transport, freight forwarding agency and trade mark agency etc.

Post 5 of 5
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