Scenario: your company imports 50 sample component sets from a German supplier to trial a new production line — sent free of charge (no payment). Customs demands declaration and tax payment. Do free samples attract VAT? And what about test goods “consumed” during trials?
1. Imported samples: free doesn’t mean tax-free
The principle: imported samples are still imported goods — subject to import-stage VAT (check operative VAT-on-imports rules and exemptions). “Free” only means unpaid to the supplier, not zero taxable value:
- Taxable value: determined by customs value — for unpaid goods, customs values by identical/similar goods or prescribed methods. Declaring “zero” because they’re free is wrong and risks reassessment.
- Rate: the VAT rate for the goods category (check the operative tariff).
- Input credit: import-stage VAT paid is creditable if samples serve taxable business operations (e.g., trials for taxable products).
2. Test goods consumed in trials: tax treatment
For test goods destroyed or consumed during trials (components broken in durability testing):
- Import-stage VAT is still payable as above.
- Input VAT is not creditable for the consumed portion producing nothing — it doesn’t serve taxable output.
- Keep trial records: test minutes, photos, consumption confirmations — for tax-finalization queries.
3. Distinguish from temporary import and non-trade goods
- Temporary import for re-export (exhibition samples returned abroad): temporary import procedures — exempt from import duty and VAT if re-exported on time (check operative rules).
- Non-trade goods (gifts): still subject to import-stage VAT on customs value — “gift” is no tax shield.
Frequently asked questions
1. Do free samples attract VAT?
Yes — samples are imported goods, subject to import-stage VAT on customs value. Declaring “zero” is wrong.
2. How is taxable value determined?
By customs value — for unpaid goods, customs uses identical/similar goods or prescribed methods.
3. Is the VAT paid creditable?
Yes — if samples serve taxable business operations. The consumed portion producing nothing isn’t creditable.
4. What about goods destroyed in testing?
Import tax still payable; input VAT on the consumed portion isn’t creditable. Keep test minutes for queries.
5. Samples for exhibition then returned?
Use temporary import–re-export procedures: exempt if re-exported on time (check operative rules).
This article has been quality-reviewed by the FLAW AI Legal Council
