How to import nested categories from XML file?

The following code snippet did the trick:

<wp:term>
    <wp:term_id><![CDATA[1]]></wp:term_id>
    <wp:term_taxonomy><![CDATA[category]]></wp:term_taxonomy>
    <wp:term_slug><![CDATA[test-category-1]]></wp:term_slug>
    <wp:term_parent><![CDATA[]]></wp:term_parent>
    <wp:term_name><![CDATA[Test Category 1]]></wp:term_name>
</wp:term>
<wp:term>
    <wp:term_id><![CDATA[2]]></wp:term_id>
    <wp:term_taxonomy><![CDATA[category]]></wp:term_taxonomy>
    <wp:term_slug><![CDATA[sub-category-1]]></wp:term_slug>
    <wp:term_parent><![CDATA[test-category-1]]></wp:term_parent>
    <wp:term_name><![CDATA[Sub Category 1]]></wp:term_name>
</wp:term>

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