China: PRC Measures for Administering Import and Export Taxation
Date of publication: November 21st, 2024
On October 28, 2024, the General Administration of China Customs promulgated Order No. 272 (2024) about “
The Measures of the People’s Republic of China on The Administration of Taxation on Import and Export Goods
”, and it will take effect on December 1, 2024. They outline regulations for customs tax collection and management. These measures ensure compliance with state taxation policies, protect taxpayer rights and regulate import/export tariffs, including value-added and consumption taxes. Key provisions include taxpayer responsibilities, tax calculation methods, procedures for tax refunds, additional tax collection, and enforcement measures. The document also addresses special circumstances like leased goods, temporary imports/exports, and goods for repair. It emphasizes confidentiality, risk management, and coordination among customs authorities. The measures replace previous regulations stipulated in Order No. 124 on Jan 04, 2005 and its following amendments in 2010, 2014, 2017 and 2018; and the General Administration of Customs will interpret them.The Order No. 272 consists of 08 chapters with 84 articles while the Order No. 124 consists of 07 chapters and 85 articles. Here is the summary of those.
General provisions
There are some changes in the General Provisions that refers to the “Tariff Law” and emphasizes the protection of “legitimate rights and interest s of taxpayers” rather than to mention “the Regulations on Duties” and principles of tax collection and management in accordance with the law, levy at rates and strict refund and compensation while the former law specifies "accurate classification, correct valuation, collection on the basis of applicable rates, reduction and exemption according to law, refunding and recovering duties and taxes by strict standards.".
- Purpose: Establishes the legal framework for the collection and management of customs taxes on import and export goods under the Customs Law and Tariff Law; and other laws and regulations to ensure the implementation of the State taxation policy, strengthen the collection and management of customs tax, ensure the collection of taxes under the law, safeguard State taxation and protect the legitimate rights and interests of taxpayers
- Scope: Applies to import and export tariffs, value-added tax (VAT), and consumption tax at the import stage while the former one extends to the administration of levying import taxes on incoming articles and vessel tonnage dues, providing additional context for when these rules apply.
- Taxpayers: Defines taxpayers rather than under the broader term of “duty and taxpayers”; and withholding agents, including e-commerce platform operators, customs brokers and logistics companies involved in cross-border e-commerce.
Calculation of taxes
This chapter will cover similar fundamental processes and there are differences in the specifics of tax declaration; exchange rate application and handling of special cases like advance rulings on price, classification and origin; and payment extensions. The structure and terminology also vary slightly that reflects changes in China’s policy.
- Tax Declaration: Taxpayers must declare and provide the necessary documentation for tax calculation.
- Tax Payable: Determined by taxable price, HS classification, origin, quantity, and applicable tax rates.
- Exchange Rates: Based on the RMB central parity rate announced monthly.
- Tax Rates: Includes most-favoured-nation rates, agreed rates, and others, with special provisions for anti-dumping and countervailing measures.
- Tax Calculation: The details of different formulas have been provided in Article 17.
- Tax Payment: Taxes must be paid within 15 days; late payment incurs 0.05% daily penalty.
Tax collection in special circumstances
This chapter focuses on compensation/replacement goods, leased goods, temporary import/export, repair and processing goods, and returned goods, with specific requirements and exemptions in each case. There are no changes, just some wordings for tariff code consistency if tariff code changes, general tax management provisions will apply rather than the regular provisions for import and export goods apply.
- Compensation goods: No tariffs on goods imported/exported for no-cost compensation due to damage or non-conformity.
- Leased goods: Procedures for tax payment on leased goods, including instalment payments and guarantees.
- Temporary imports/exports: Tax exemptions and procedures for temporary goods, with penalties for non-compliance.
- Repair/Processing goods: Regulations for goods entering/leaving for repair or processing, including re-import/export timelines.
Tax amount confirmation
This chapter is added to focus on confirming tax amounts and managing risks.
- Verification: Customs can verify and confirm taxable prices, classifications, and origins.
- Risk management: Implementation of risk management and audits to ensure tax compliance.
Refund, additional collection, and recovery of taxes
The structure of this chapter has changed to provide a more transparent process for both refund and collection with clearly defined timeframes, specific circumstances and consequences for non-compliance; and some highlights for overpayment detection, i.e., rather than the customs authority directly notifies the taxpayer to go through the refund formalities, they will issue a tax confirmation letter notifying the taxpayer to initiate refund procedures. Refund application time limit for overpayment, underpayment (evasion collection time limit) to 3 years from the date of tax payment or release of goods compared to that of 01 year in the former regulation.
- Tax refunds: Procedures for refunds of overpaid taxes, with specific circumstances and timelines. A tax confirmation letter is issued and the whole refund process will take within 03 months.
- Additional collection: Customs can collect additional taxes if under-collection or evasion is discovered, with penalties for late payment.
Tax guarantee
Chapter VI in the new regulations exhibits greater specificity, transparency, and structure compared to the previous version. It provides clearer guidelines regarding tax guarantee requirements, procedures, and timelines for both taxpayers and Customs. Terminology “tax guarantee” is being used consistently to replace the old one “security on duties and/or taxes”. This chapter will provide a more detailed and specific list of eight circumstances that required a tax guarantee while the previous one covers only 7. There is no change for the guarantee period remaining at not to exceed six months, and extension is allowed.
- Guarantees: Requirements for providing guarantees in certain circumstances, such as undetermined taxable elements or pending applications.
- Guarantee period: Generally, not exceeding six months, with provisions for extensions.
Tax enforcement
This chapter is added and establishes a clear and structured framework for tax enforcement, outlining preventive measures, procedures for addressing non-payment, and provisions for suspending or terminating enforcement actions when appropriate.
- Compulsory measures: Customs can enforce tax collection through measures like freezing deposits or seizing property if taxes are unpaid.
- Suspension/Termination: Conditions under which tax enforcement can be suspended or terminated.
Supplementary provisions
There are some changes in this chapter that explicitly mentions specific tax types (vessel tonnage, Hainan FTP, anti-dumping, etc.) and areas (cross-border e-commerce, bonded goods, special supervision zones) governed by other laws or regulations, with these Measures applying subsidiarily. This chapter also highlights Customs' role in establishing a taxpayer management system, optimizing tax services, and building harmonious relationships with enterprises. Articles related to electronic data interchange and dispute resolutions have been removed and refer to the application of other laws and regulations (Article 81).
- Special taxes: Management of specific taxes like vessel tonnage tax and Hainan Free Trade Port taxes.
- Bonded goods: Tax administration for bonded goods and special customs areas.
- Violations: Penalties for violations, including smuggling or customs regulation breaches.
Outstanding points
- The measures emphasize legal compliance, transparency, and protection of taxpayer rights.
- They introduce mechanisms for managing tax risks and ensuring accurate tax collection.
- Special provisions address modern trade practices, such as cross-border e-commerce.
- The measures provide detailed procedures for handling special circumstances, including compensation and leased goods.
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