Measures of People's Republic of China (PRC) Customs on Supervision and Taxation of Import and Export Goods of Foreign-invested Enterprises

Chapter I General Provisions Article 1 In order to encourage foreign companies, enterprises and other economic organizations or individuals to set up Chinese-foreign equity joint ventures, Chinese-foreign cooperative ventures and foreign-funded enterprises (hereinafter referred to as foreign-invested enterprises) in China, implement the national industrial policy, develop the national economy, facilitate legal entry and exit, and strengthen customs supervision, these Measures are formulated in accordance with the Customs Law of People's Republic of China (PRC) and relevant laws and regulations. Article 2 Enterprises with foreign investment shall perform their obligations in accordance with the laws and regulations of People's Republic of China (PRC) and these Measures, and their import and export goods shall be truthfully declared to the customs, subject to customs supervision and enjoy relevant preferential treatment. Article 3 Foreign-invested enterprises that meet the requirements of the customs shall be awarded the title of "reputable enterprise" after examination by the customs, and shall be given corresponding convenience when going through customs formalities. Article 4 Enterprises with foreign investment that meet the requirements of customs supervision may be allowed to set up bonded warehouses and bonded factories. When the customs deems it necessary, it may send customs supervisors to foreign-invested enterprises to go through customs formalities. The relevant enterprises shall provide necessary facilities. Article 5 Goods under customs supervision as stipulated in the Customs Law of People's Republic of China (PRC) imported by foreign-invested enterprises shall not be sold, transferred, mortgaged or used for other purposes without customs permission. Chapter II Filing Procedures and Basis for Inspection and Release Article 6 Foreign-invested enterprises shall go through the formalities of enterprise registration and filing with the competent customs on the strength of the approval certificate of the foreign economic and trade administrative department of People's Republic of China (PRC) or its authorized institution, the copy or photocopy of the business license of the industrial and commercial administrative department of People's Republic of China (PRC) or its authorized institution, the articles of association and the contract of the enterprise. Article 7 Investors of foreign-invested enterprises shall pay their capital contributions in accordance with the provisions of the contract and articles of association and the relevant provisions of the state, and submit a capital verification report to the customs within one month after capital verification. Article 8 When going through the customs declaration formalities for import and export goods, foreign-invested enterprises shall fill in the Special Customs Declaration Form for Import and Export Goods of Foreign-invested Enterprises to declare to the customs, and submit the goods invoices, container lists and other relevant documents for inspection; Commodities that need to apply for licenses according to the provisions of the state shall also submit import (export) licenses to the customs; Commodities that do not belong to the state regulations and apply for licenses shall be examined and released by the customs on the basis of documents approving the establishment of enterprises or import and export contracts.

Foreign-invested enterprises are exempted from examination and approval and import license for importing reasonable quantities of goods for their own use. Article 9 Where an enterprise with foreign investment purchases products that are not its own for export in order to balance foreign exchange receipts and payments, the customs shall examine the approval documents of the competent economic and trade department; Among them, the goods subject to export license administration by the state shall apply for export licenses with the approval documents, and the customs shall examine and release them accordingly. Article 10 Enterprises with foreign investment shall, before the goods are imported, go through the formalities of tax-free examination and approval with the competent customs on the basis of the approved contract equipment list and other documents. After approval by the customs, the "Tax Exemption Certificate for Imported Goods of Foreign-invested Enterprises in People's Republic of China (PRC)" (hereinafter referred to as the tax exemption certificate) will be issued. When the goods are imported, the enterprise shall go through the customs declaration formalities with the tax exemption certificate.

The validity period of the Certificate of Tax Collection and Exemption issued by the Customs is three months. If there are special circumstances, it may be extended with the approval of the competent customs. The longest extension period is three months.

The above-mentioned duty-free goods shall be inspected and released by the competent customs, or by the customs at the place of entry. The third copy of the tax exemption certificate shall be returned to the competent customs for verification within one month after the goods are inspected and released. Article 11 When a foreign-invested enterprise performs a product export contract, the customs shall issue the Registration Manual of People's Republic of China (PRC) and China Customs on Re-export of imported materials and parts required for the foreign-invested enterprise to perform the product export contract (hereinafter referred to as the Registration Manual).

The raw materials, fuels, spare parts, components, accessories, auxiliary materials and packaging materials imported by foreign-invested enterprises to fulfill product export contracts shall be supervised by the customs as bonded goods. When importing, the import license shall be exempted, and the customs shall examine and release the goods according to the enterprise contract or import and export contract.

If the products processed and exported by foreign-invested enterprises are subject to the administration of national export licenses, the customs shall examine and release them on the strength of the export licenses. Chapter III Provisions on Taxation of Import and Export Goods Article 12 Enterprises with foreign investment may enjoy the preferential treatment of tax reduction and exemption given by the customs for goods imported with additional investment within the total investment and in accordance with regulations, while goods imported without investment shall be taxed according to regulations. Article 13 Chinese-foreign equity joint ventures shall be exempted from customs duties and consolidated industrial and commercial tax when importing the following goods:

(1) Machinery, equipment, spare parts and other materials funded by the foreign party as stipulated in the contract [other materials refer to the materials needed for the construction of factories (fields) and the installation of reinforcing machines, the same below];

(two) machinery and equipment, spare parts and other materials imported with funds within the total investment;

(3) machinery, equipment, spare parts and other materials imported with increased capital that cannot be guaranteed for production and supply in China. Article 14 The goods and production management equipment specified in Article 13 imported by foreign-capital enterprises shall be exempted from import duties and consolidated industrial and commercial tax. Article 15 Chinese-foreign cooperative exploitation of offshore oil imports machinery, equipment, spare parts and materials directly used in exploration and development operations; Parts and materials imported for manufacturing mining machinery and equipment, as well as those imported with foreign capital, belong to energy development, railway, highway and port infrastructure construction, industry, agriculture, forestry, animal husbandry and aquaculture, offshore fishing, scientific research, education and medical and health projects. Machinery and equipment imported in accordance with the contract, as well as materials needed for building factories (fields) and installing and strengthening machinery and equipment, shall be exempted from import duties and consolidated industrial and commercial tax.