Major updates in China Customs

Administration Measures on Processing Trade Goods

China’s General Administration of Customs (GAC) has revised the Administration Measures on Processing Trade Goods. In the latest revision, Article 6 for mortgaged goods has been changed from “without permissions from the customs, the processing of trade goods cannot be mortgaged” to “after obtaining the customs’ approval and completing the relevant procedures, the processing of trade goods can be mortgaged”. This revision reflects the fact that China customs has changed its attitude on the mortgage of processing trade goods from negative to positive – giving the manufacturer an extra means of re-financing under the COVID-19 pandemic.

Administration Measures on Import/Export Tax Exemption and Reduction

21 December 2020 saw the GAC issue the Administrative Measures on Import/Export Tax Exemption and Reduction (GAC Circular No.245), which became effective on 1 March 2021, replacing its 2008 version.

The major revisions to the Administration Measures are as follows:

• Simplify the procedure for tax exemption and reduction application;
• Shorten the supervision period for tariff-exempted/reduced goods from 5 years to 3 years (except ships, aircrafts and motor vehicles);
• Delete “pledge” from the usage scope of tariff-exempted/reduced goods;
• Add a penalty (maximum RMB 10,000) for failure in reporting company changes to the customs;
• Include companies’ follow-up management of import tax exemption/reduction goods in the customs credit rating system.

Customs Implementation Rules on Duty Exemption for Encouraged Catalogue (2020 Version)

The Industry Catalogue for Encouraged Foreign Investment (2020 Version) (“2020 Catalogue”) was implemented as of 27 January 2021, and replaces its 2019 version. The new catalogue contains a total of 1,235 items, with 127 items added (65 new items on the national list and 62 new items on the regional list) and 88 items modified.

Following the roll-out of the 2020 Catalogue, China customs recently re-clarified the duty exemption policy related to the catalogue. For foreign-invested projects covered by the catalogue, the self-use equipment (and the accompanying technology, supporting parts, and spare parts) imported within the project’s total investment can be exempted from the customs duty. However, these imports will still be subject to import VAT.

It is recommended that Chinese importers evaluate whether their investment projects fall within the scope of the 2020 Catalogue, and assess whether their imports are subject to customs duty exemption.

E-Clearance for Dual-Use Goods

For some time, importers and exporters of dual-use (civil/military) goods have had to submit a printed version of the relevant licences and other documents for customs declaration. As of 1 January 2021, China customs has offered an option to adopt e-clearance, which allows customs declaration information and relevant licences to be stored and transferred electronically, and then automatically reviewed by the customs. This reform has greatly improved customs clearance efficiency and has reduced labour costs for the importers and exporters at the same time.

Read the WTS Global Customs Newsletter here.