| Duty levying is one of the four tasks
of Customs authorities along with inspection, supervision
and compilation of statistics. Duty levying is implemented
in accordance with the Customs Law of China, the Regulations
of China on Import & Export Duties, and the Rules of the
Customs of China for the Administration of the Levying of
Duties on Imports and Exports.
After China's entry into the WTO, its general duty level decreases
year by year. Take a look at the cases from 2004 to 2006.
With the approval of the State Council in 2006, duty items
and rates stipulated in the Customs Tariff of Import and Export
of China have been adjusted starting January 1, 2006 (the
adjusted version-2006 will be published by the Chinese Customs
Publishing House). After adjustment, the total duty level
of 2006 is 9.9%.
After the adjustment of the Customs Tariff of Import and Export
of China in 2005, the general duty level relating to most-favored
nation rates has been decreased from 10.4% in 2004 to 9.9%.
In 2004, after the adjustment of the Customs Tariff of Import
and Export of China, the general Customs level (arithmetic
average duty rate) decreased from 11% to 10.4%.
The Customs Tariff of Import and Export of China (i.e. HS
category): Import duty rates, consumption tax rates, value-added
tax rates and export duty rates have been indicated in the
document, among which, the import duty rates fall into common
duty rate, most-favored nation duty rate, agreement duty rate
and preferential duty rate, and Customs offices will select
a duty rate to calculate according to the place of origin
of goods and relevant policies. The Regulations of China on
the Place of Origin of Import and Export Goods was passed
in 61st standing committee meeting of the State Council on
August 18, 2004, promulgated by No.416 Decree of the State
Council on September 3, 2004, and implemented as of January
1, 2005. Therefore, the place of origin of goods is extremely
important. In addition, duties are levied pursuant to price,
quality or other methods stipulated by the country. The calculation
formulas are:
By price: Payable duty = after-duty price x duty rate (applicable
to most commodities)
By quantity: Payable duty = goods quantity x unit duty amount
(e.g. textile in 2005)
Article 37 of the Regulations of China on Import & Export
Duties provides that the duty-payer shall pay duties through
a designated bank within 15 days after the Customs authorities
fill out and issue the duty levying letter, and duty-payers
who fail to pay the duty amount in time shall be levied a
late fee equivalent to 5/10000 of the delayed amount daily
from the delay date.
Cases exempting duties: Article 45 of the Regulations of China
on Import & Export Duties provides that the following
goods of import and export shall be exempted from duties:
(1) A batch of goods with duty under RMB50;
(2) Advertising articles and goods samples without commercial
values;
(3) Materials donated by foreign government and international
organizations free of charge;
(4) Losing goods before Customs authorities allow to clear;
(5) Necessary fuel, raw materials and food carried on transporting
vehicles for the travel going in/out the territory.
Damaged goods before Customs authorities allow to clear can
be deducted from duties according to damage levels recognized
by the Customs authorities.
Of other goods subject to duty exemption or deduction stipulated
by law, Customs authorities can exempt or deduct duties according
to relevant regulations.
Duty Exemption and Ded uction of Processing Trade
goods
Of imported equipment subject to duty exemption and deduction
of processing trade enterprises, eligible enterprises shall
apply to the competent Customs office for registration for
the record or duty exemption/deduction before the import of
equipment, and the acceptance date shall be the date when
the Customs office accepts the application materials. After
examination, as to enterprises according with registration
conditions or duty exemption/deduction policies, the Customs
office shall register or issue the Duty Levying and Exemption
Certificate of Import and Export Goods ("Duty Levying
and Exemption Certificate") within 10 working days from
the acceptance date. Where it is necessary to ask from instructions
from the General Administration of Customs of China for the
purpose of defining policy regulations, approval authority
limits or technical indexes, or for other special reasons
the Customs office fails to fulfill the registration procedure
or issue the Duty Levying and Exemption Certificate within
the regulated time limit, the time can be prolonged according
to cases with the approval of competent Customs commissioner
or his/her authorized representative, and it shall be notified
to the import and export enterprise to explain the reasons.
The processing trade enterprise shall take the Duty Levying
and Exemption Certificate and relevant Customs declaration
documents to the Customs office of the import place to handle
the Customs declaring procedure of importing equipment subject
to duty exemption and deduction. If the processing trade enterprise
has applied for duty exemption/deduction registration/approval
with the Customs office, and if the goods reach the import
port during the regulated handling period by the competent
Customs office (including the approved prolonged time limit),
the processing trade enterprise may apply for “duty guarantee?with
the Customs office to handle the goods inspection and clearance
procedure.
In order to handle the "duty guarantee" procedure,
the processing trade enterprise shall bring forward the application
to the competent Customs office before the import declaration
of goods. After examination and approval the competent Customs
office shall issue the Certificate of the Customs Office Approving
Duty Guarantee of Duty Deducting/Exempting Goods ("Guarantee
Certificate"). If the Customs office of the import place
verifies that it complies with the guarantee conditions, the
enterprise shall handle the goods guarantee and inspection/clearance
procedure with the Guarantee Certificate. If the competent
Customs office approves a prolonged time limit of handling
the registration and approval procedure due to special cases,
the time limit of duty deduction/exemption guarantee can be
extended accordingly, and the competent Customs office shall
timely notify the import unit to apply for such extension
with Customs authorities.
The import unit shall bring forward the duty guarantee extension
application before the competent Customs office 15 days before
the expiration of the time limit of the Guarantee Certificate.
After the competent Customs office confirms and issues the
Certificate of the Customs Office Approving Time Limit Extension
of Duty Guarantee of Duty Deducting/Exempting Goods ("Extension
Certificate"), the Customs office of the import location
shall handle the duty guarantee extension procedure against
the Extension Certificate in accordance with relevant regulations.
Duties paid to Customs authorities can be cash, bank transfer
or online payment (Matters on Guarantee of Online Payment
of Duties promulgated by 2005 No.40 Circular of the General
Administration of Customs).
Article 41 of the Regulations of China on Import and Export
Duties provides that where import materials in processing
trade are imported in bond pursuant to regulations of the
country and the finished products or import materials fail
to be exported within the regulated time limit, the Customs
office shall levy import duties according to relevant regulations.
Where import materials in processing trade are levied import
duties pursuant to regulations of the country during the importation
and the finished products or import materials are exported
within the regulated time limit, the Customs office shall
return back the levied import duty pursuant to relevant regulations.
Customs supervision on goods focuses on goods duty unpaid
including goods in bond, temporary import/export goods, and
specific duty deduction/exemption goods. Goods in processing
trade belong to goods in bond instead of duty-free goods.
Many businessmen misunderstand this point to some extent.
Due to the particularity of processing trade goods, no duty
needs to be paid to the Customs office during importation.
As for the Customs office, such goods are under its supervision,
and cannot be used otherwise without permission of the Customs
authorities, or else involved enterprises will be subject
to law punishment (smuggle in most cases), or even criminal
punishment in severe cases.
Goods in processing trade shall not fall into the scope of
duty-freeness until the process of domestic processing and
export have been finished. As for leftover and residual materials,
the enterprises shall apply for after-duty cancellation after
verification with the competent Customs office according to
actual situation.
Domestic processing trade companies shall make effective management
of imported bonded goods, e.g. implementing routine check
by account-making. In addition, the companies shall also learn
relevant HS codes of their major goods. We've described that
duty rates of Customs levying are pursuant to HS codes and
places of origin of commodities. As to leftover or residual
materials, finished products or half-finished products that
require paying duties (Customs authorities have released reference
prices for some), the companies shall make comparison in multiple
aspects before applying for duty payment with the Customs
office, so as to avoid unnecessary loss.
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