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 China Law information


(Promulgated on August 22, 1992)

(Promulgated on August 22, 1992) Whole Doc.

Chapter 1 General Principles Article 1 In order to encourage foreign companies, enterprises and other economic organizations or individuals to come to China and set up Sino-foreign equity joint ventures, Sino-foreign cooperative joint enterprises and foreign enterprises (hereinafter referred to as enterprises with foreign investment), implement the state industrial policy, develop the national economy, simplify procedures for legal import and export and strengthen customs supervision and control, these Measures are hereby formulated in accordance with the stipulations of the Customs Law of the People's Republic of China and related laws and regulations.

Article 2 Enterprises with foreign investment shall perform their various duties in accordance with the stipulations of the laws, regulations and measures of the People's Republic of China. They shall accurately declare at Customs their import and export goods, accept customs supervision and control and enjoy relevant preferential treatment.

Article 3 For enterprises with foreign investment considered to properly comply with the stipulations of Customs, upon examination, Customs will grant the title "Enterprises with a Good Reputation", and provide with relevant conveniences in the performance of customs formalities.

Article 4 Enterprises with foreign investment, which meet the conditions of customs supervision and control, may be allowed to set up bonded warehouses and bonded factories. When considered to be necessary, Customs may send customs personnel to be stationed in enterprises with foreign investment to carry out the supervision and control and handle customs procedures. Relevant enterprises should provide necessary conveniences.

Article 5 Goods imported by enterprises with foreign investment, which come under the supervision and control of Customs according to the stipulations of the Customs Law of People's Republic of China, shall not be sold, transferred, mortgaged or diverted to other purposes without authorization or permission of Customs.

Chapter 2 Procedures for the Recording of Customs Clearance Basis Article 6 Enterprises with foreign investment shall bring with the copies or duplicates of the documents of ratification issued by the Department in charge of foreign economic relations and trade of the People's Republic of China, or the organization it authorized, and the copies or duplicates of the business license issued by the State Administration for Industry and Commerce, or the department it authorized, as well as the articles of association and contracts of enterprises', to go through the formalities of registration with local Customs for the record.

Article 7 Each party of enterprises with foreign investment shall pay the required funds in accordance with the stipulations of contracts, articles of association and relevant State regulations and, within 1 month after the funds are verified, hand in the report of verified funds to Customs.

Article 8 When declaring their import and export goods at Customs, enterprises with foreign investment shall fill in a bill of entry specially provided for enterprises with foreign investment and declare to Customs and hand in all goods invoices, packing lists and other related documents for examination. They shall also hand in import or export licenses for commodities needing to no license according to State regulation, Customs will check and give clearance in accordance with the documents approving the establishment of the enterprises or with the import and export contract.

Enterprises with foreign investment are not required to apply for approval and to obtain import licenses for a reasonable amount of goods imported for their own use.

Article 9 When a enterprise with foreign investment purchases goods that are not products of the enterprises for export in order to obtain a balance of foreign exchange income and expenditure, Customs shall check the document of ratification issued by the economic and trade department in charge. For commodities which come under state export license control, the enterprise shall apply for export license in accordance with the document of ratification, and Customs shall check and issue clearance.

Article 10 A enterprise with foreign investment shall, before importing goods, bring with its approved contract and equipment detailed lists and other documents to perform the Customs in charge. After examination and approval, the Customs shall issue the "Tax Levy and Exemption Certificate of the Customs of the People's Republic of China" for the import goods of the enterprise with foreign investment (hereinafter referred to as Tax Levy and Exemption Certificate). When the goods are imported, the enterprise shall bring the "Tax Levy and Exemption Certificate" to perform the procedures of declaration at Customs.

The period of validity of the "Tax Levy and Exemption Certificate" is 3 months. The period can be extended upon the approval of the Customs in charge under special circumstances. The longest additional extension period is 3 months.

For the above-mentioned tax levy and exemption, the examination formalities can either be performed by the Customs in charge or by Customs in the entry area. The triplicate form of the "Tax Levy and Exemption Certificate" shall be returned to the Customs in charge for record and examination within 1 month after the goods are given clearance.

Article 11 The Customs shall verify and issue to the foreign-funded enterprises, which implement the product export contract, the "Registration Handbook of the Customs of the People's Republic of China on Imported Materials and Processed Parts that are necessary to Foreign-funded Enterprises to Implement their Product Export Contract" (hereinafter referred to as Registration Handbook).

Raw materials, fuel, bulk parts, spare parts, components, auxiliary parts, semi-finished materials and packing materials imported by foreign-funded enterprises in order to implement product export contract shall be placed under the supervision and control of Customs as bonded goods. When these goods are imported, no import license is required.

Customs shall give clearance in accordance with the enterprises contract or import and export contract.

Products processed for export by a foreign-funded enterprise, which come under the states export license control, are given clearance for export in accordance with their export license.

Chapter 3 Provisions on Taxing Import and Export Goods Article 12 A foreign-funded enterprise, which import goods within the amount of total investment and approved additional investment, can enjoy preferential tax reduction or exemption treatment. Tax shall be levied, according to regulations, on goods imported over the amount of investment.

Article 13 No customs duties or industrial and commercial consolidated tax shall be levied on the following goods imported by a Sino-foreign joint venture: (1) machinery and equipment, spare parts and components, and other materials (other materials refer to materials needed for the construction of a factory and the installation and reinforcing of machinery) contributed as investment by the foreign partner in accordance with the stipulations of the contract; (2) machinery, equipment, spare parts, components and other materials imported with funds within the total investment; (3) machinery, equipment, spare parts, components and other materials imported with added capital, the production and supply of which cannot be guaranteed in China.

Article 14 Goods prescribed in Article 13 as well as production and management equipment imported by a enterprise with foreign investment are exempted from import duties and industrial and commercial consolidated tax.

Article 15 Machinery, equipment, spare parts and materials directly used in prospecting and development work by Sino-foreign cooperative exploitation of offshore petroleum, imported spare parts, components and materials necessary for the manufacture of machinery and equipment used in exploitation work as well as projects imported with foreign-investment for energy development, the infrastructure of railways, highways and ports, as well as in industry, scientific research education, and medical and health services, and machinery and equipment imported in accordance with the stipulations of contracts and materials needed for the construction of factories and sites and for installing and reinforcing machinery and equipment, are all exempted from import duties and the industrial and commercial consolidated tax.

Article 16 Goods imported for Sino-foreign cooperatively managed commerce, catering, photo studios, and other service trades, maintenance centres, worker training operation, passenger and cargo vehicle transportations, offshore fishing as well as other trades, shall be levied on import duties and industrial and commercial consolidated tax according to regulations, unless there are separate stipulations of the State.

Article 17 A reasonable amount of communication equipment, vehicles used in production, office articles (equipment) imported for self-use by a enterprise with foreign investment within the total amount of investment are exempted from import duties and the industrial and commercial consolidated tax according to the stipulations of the State.

Article 18 For imported goods enjoying preferential tax reduction and exemption treatment as listed in Articles 13, 14, 15 and 17, the term for supervision control shall be regulated by Customs. The term is counted from the day the tax-free imported goods are given customs clearance.

Term of imported goods enjoying preferential taxfree treatment are as follows: (1) ships, aircrafts and building materials (including rolled steel, timber, plywood, artificial board and glass) for 8 years (2) motor-driven vehicles and house-hold electrical appliances for 6 years (3) machinery, equipment and other materials for 5 years For tax-reduced and exempted goods that exceed the term of customs supervision and control, the enterprise may apply to Customs to lift supervision and control. Upon ratification, the Customs in charge shall issue a "Certificate of the Customs of t e People's Republic of China on Lifting Supervision and Control over Tax-Reduced and Exempted Imported Goods of a Foreign-funded Enterprise".

For the tax reduction and exemption of imported goods within the term of customs supervision and control which are resold or sold in China upon the approval of the original examination and approval department, the Customs shall make an appraisal of depreciation according to the time of use of these goods and re-levy the import duties.

With regard to tax-reduced or exempted imported goods not included in the term of customs supervision and control, Customs shall make a price appraisal according to the use of the goods and re-collect the import duties.

Article 19 A reasonable amount of catalytic agents, grinding materials and fuel consumed in production which are imported by the foreign-funded enterprise in order to perform the product export contract and are directly used in processing export products shall be exempted from import duties and industrial and commercial consolidated tax.

Article 20 When by-products, substandard products, and leftover industrial surplus generated in the process of production are converted to domestic sales by the foreign-funded enterprise in order to perform the product export contract, after being verified and according to the circumstances.

Wastes proved really worthless can be exempted from repayment tax.

Materials imported by a foreign-funded enterprise for trial run shall be levied on duties according to regulations when they are imported.

Article 21 Materials and parts imported by a foreign-funded enterprise for processing products for domestic sales, with the approval of the economic and trade department in charge, shall be levied on duties when they are imported.

Article 22 Products produced by the foreign-funded enterprise for export, except those commodities which are restricted for export or except there are separate provisions of the State, are exempted from export duties.

Chapter 4 Management, Verification and Cancellation of Bonded Im- ported Materials and Parts Article 23 Enterprises with foreign investment shall set up special account books meeting all customs requirements and state in form of the import, storage, drawing, using and processing at another factory of bonded imported materials and parts (hereinafter referred to as materials and parts), as well as the storage, export and internal sales of processed products, and regularly report them to Customs for verification.

Article 24 Materials and parts imported by an enterprise with foreign investment shall be, except due to special reasons and with the approval of Customs, processed to finished products to perform related export contracts within 1 year from the date of imported.

When imported materials, parts and processed products are changed to internal sales for some reasons, the foreign-funded enterprise shall have the approval of the economy and trade department concerned, and repay duties and the industrial and commercial consolidated tax on the imported materials and parts before they are allowed to be sold in the domestic market. For materials and parts under license management, the import licenses shall be submitted for check.

Article 25 Materials and parts imported by foreign- funded enterprise are not allowed to be processed directly at another factory. If they have to be processed at another factory due to special circumstances, the foreign-funded enterprise shall report to Customs in advance for approval.

Within the term of the customs approval, the finished and semi-finished products processed at another factory must be transferred to the original enterprise. When a foreign-funded enterprise's imported materials and parts processed into finished or semi-finished products are not directly exported, but instead are sold or transferred to another processing and exporting enterprise for re-processing and assembling, the enterprise with the imported materials and parts shall, together with the original enterprise, bring with them the purchasing and sale contract, or production and processing contracts and other related documents signed by both parties to Customs to perform the carry-over, verification and writing off procedures.

Article 26 For materials and parts under an import contract, a foreign-funded enterprise must, within 1 month from the day of the export of the last batch of finished products, bring in the "Registration Handbook" and the declaration of export goods and other related documents to the Customs to perform the verification and writing off procedures.

Article 27 After a foreign-funded enterprise imports materials and parts, if there are changes, transfer and termination of the contract, it shall immediately perform relevant procedures at Customs.

Chapter 5 Mortgage, Bankruptcy and Liquidation Article 28 When a foreign-funded enterprise uses goods under customs supervision and control as a loan mortgage to domestic and foreign financial institutions, it shall apply in advance to the customs department in charge and perform mortgage procedures upon approval.

When the above-mentioned collaterals are being actually handled, the enterprise shall depreciate them according to their used years, repay duties and complete the customs procedures.

Article 29 When a foreign-funded enterprise terminates or cancels a contract, it shall, within 15 days from the date of approval of liquidation by examination and approval department, or within 15 days from the date of enforcement of the bankruptcy is decided by the court, bring with it duplicates of the documents of ratification issued by the examination and approval organization, detailed statements of the duty levy or exemption on imported materials, the "Tax Levy or Exemption Certificates" and the "Registration Handbooks" issued by Customs, to apply to the customs in charge and perform the procedures for cancelling the tax reduction and exemption on imported materials. The enterprise shall return the "Customs Declaration Registration Certificates", the "Declarant Certificates" and other related certificates.

Before Customs completes the procedures for cancelling the case of the above-mentioned enterprises duty reduction and exemption of imported materials, it shall seal the related imported materials for safekeeping.

Article 30 Before a bankrupt foreign-funded enterprise clears off its property, it shall perform the procedures of paying duties for the supervised and managed goods enjoying preferential customs duty treatment according to State regulations.

Article 31 With regard to the duty reduction or exemption of imported goods of a foreign-funded enterprise which terminates or cancels a contract within the term of customs supervision and control, Customs shall handle the goods according to the following provisions: (1) when the imported goods are left to the Chinese partner of the joint venture for its continued use, or transferred or sold to domestic units, Customs shall depreciate and re-levy duties on them according to the duration of their usage; (2) imported goods transferred to another domestic foreign-funded enterprise enjoying equal preferential treatment, after approval of the examination and approval department and completion of the carry-over procedures at Customs, can continue to have duty reduction and exemption treatment; (3) upon approval from Customs, the foreign partner to a joint venture is allowed to ship the original duty- free imported goods out of China.

Article 32 For the above-mentioned enterprise with foreign investment which has completed customs procedures, Customs shall issue it the "Notice for the Enterprise Completing Customs Procedures".

Chapter 6 Supplementary Provisions Article 33 Foreign-funded enterprises set up in the special economic zones, economic and technological development areas, freetrade zones, high-tech development areas, coastal open cities, coastal open areas as well as other regions practising special preferential policies, shall handle their imported and exported goods in accordance with the Measures. In addition, they shall also implement the related policies granted by the State to the foreign-funded enterprise in the above-mentioned areas.

Article 34 Enterprises invested by compatriots from Taiwan, Hong Kong and Macao and overseas Chinese, besides carrying out the relevant stipulations of the State Council Regulations on Encouraging Investment of Taiwan Compatriots, and the State Council Regulations on Encouraging Investment of Overseas Chinese and Hong Kong and Macao Compatriots, shall also implement the stipulations of the Measures.

Article 35 With regard to actions violating the Measures, Customs shall deal with them according to the Customs Law of the People's Republic of China, and the Detailed Rules for the Implementation of the Customs Administrative Law of the People's Republic of China on Punishment. For those who violate the Criminal Law, the judicial organ shall affix on them the criminal responsibility according to the Law.

Article 36 When provisions contravene the Measures, the Measures shall be followed as the criterion.

Article 37 The General Administration of Customs is responsible for the interpretation of the Measures.

Article 38 The Measures are to be implemented from September 1, 1992.

ct export contract, after being verified and according to the circumstances.

Wastes proved really worthless can be exempted from repayment tax.

Materials imported by a foreign-funded enterprise for trial run shall be levied on duties according to regulations when they are imported.

Article 21 Materials and parts imported by a foreign-funded enterprise for processing products for domestic sales, with the approval of the economic and trade department in charge, shall be levied on duties when they are imported.

Article 22 Products produced by the foreign-funded enterprise for export, except those commodities which are restricted for export or except there are separate provisions of the State, are exempted from export duties.

Chapter 4 Management, Verification and Cancellation of Bonded Im- ported Materials and Parts Article 23 Enterprises with foreign investment shall set up special account books meeting all customs requirements and state in form of the import, storage, drawing, using and processing at another factory of bonded imported materials and parts (hereinafter referred to as materials and parts), as well as the storage, export and internal sales of processed products, and regularly report them to Customs for verification.

Article 24 Materials and parts imported by an enterprise with foreign investment shall be, except due to special reasons and with the approval of Customs, processed to finished products to perform related export contracts within 1 year from the date of imported.

When imported materials, parts and processed products are changed to internal sales for some reasons, the foreign-funded enterprise shall have the approval of the economy and trade department concerned, and repay duties and the industrial and commercial consolidated tax on the imported materials and parts before they are allowed to be sold in the domestic market. For materials and parts under license management, the import licenses shall be submitted for check.

Article 25 Materials and parts imported by foreign- funded enterprise are not allowed to be processed directly at another factory. If they have to be processed at another factory due to special circumstances, the foreign-funded enterprise shall report to Customs in advance for approval.

Within the term of the customs approval, the finished and semi-finished products processed at another factory must be transferred to the original enterprise. When a foreign-funded enterprise's imported materials and parts processed into finished or semi-finished products are not directly exported, but instead are sold or transferred to another processing and exporting enterprise for re-processing and assembling, the enterprise with the imported materials and parts shall, together with the original enterprise, bring with them the purchasing and sale contract, or production and processing contracts and other related documents signed by both parties to Customs to perform the carry-over, verification and writing off procedures.

Article 26 For materials and parts under an import contract, a foreign-funded enterprise must, within 1 month from the day of the export of the last batch of finished products, bring in the "Registration Handbook" and the declaration of export goods and other related documents to the Customs to perform the verification and writing off procedures.

Article 27 After a foreign-funded enterprise imports materials and parts, if there are changes, transfer and termination of the contract, it shall immediately perform relevant procedures at Customs.

Chapter 5 Mortgage, Bankruptcy and Liquidation Article 28 When a foreign-funded enterprise uses goods under customs supervision and control as a loan mortgage to domestic and foreign financial institutions, it shall apply in advance to the customs department in charge and perform mortgage procedures upon approval.

When the above-mentioned collaterals are being actually handled, the enterprise shall depreciate them according to their used years, repay duties and complete the customs procedures.

Article 29 When a foreign-funded enterprise terminates or cancels a contract, it shall, within 15 days from the date of approval of liquidation by examination and approval department, or within 15 days from the date of enforcement of the bankruptcy is decided by the court, bring with it duplicates of the documents of ratification issued by the examination and approval organization, detailed statements of the duty levy or exemption on imported materials, the "Tax Levy or Exemption Certificates" and the "Registration Handbooks" issued by Customs, to apply to the customs in charge and perform the procedures for cancelling the tax reduction and exemption on imported materials. The enterprise shall return the "Customs Declaration Registration Certificates", the "Declarant Certificates" and other related certificates.

Before Customs completes the procedures for cancelling the case of the above-mentioned enterprises duty reduction and exemption of imported materials, it shall seal the related imported materials for safekeeping.

Article 30 Before a bankrupt foreign-funded enterprise clears off its property, it shall perform the procedures of paying duties for the supervised and managed goods enjoying preferential customs duty treatment according to State regulations.

Article 31 With regard to the duty reduction or exemption of imported goods of a foreign-funded enterprise which terminates or cancels a contract within the term of customs supervision and control, Customs shall handle the goods according to the following provisions: (1) when the imported goods are left to the Chinese partner of the joint venture for its continued use, or transferred or sold to domestic units, Customs shall depreciate and re-levy duties on them according to the duration of their usage; (2) imported goods transferred to another domestic foreign-funded enterprise enjoying equal preferential treatment, after approval of the examination and approval department and completion of the carry-over procedures at Customs, can continue to have duty reduction and exemption treatment; (3) upon approval from Customs, the foreign partner to a joint venture is allowed to ship the original duty- free imported goods out of China.

Article 32 For the above-mentioned enterprise with foreign investment which has completed customs procedures, Customs shall issue it the "Notice for the Enterprise Completing Customs Procedures".

Chapter 6 Supplementary Provisions Article 33 Foreign-funded enterprises set up in the special economic zones, economic and technological development areas, freetrade zones, high-tech development areas, coastal open cities, coastal open areas as well as other regions practising special preferential policies, shall handle their imported and exported goods in accordance with the Measures. In addition, they shall also implement the related policies granted by the State to the foreign-funded enterprise in the above-mentioned areas.

Article 34 Enterprises invested by compatriots from Taiwan, Hong Kong and Macao and overseas Chinese, besides carrying out the relevant stipulations of the State Council Regulations on Encouraging Investment of Taiwan Compatriots, and the State Council Regulations on Encouraging Investment of Overseas Chinese and Hong Kong and Macao Compatriots, shall also implement the stipulations of the Measures.

Article 35 With regard to actions violating the Measures, Customs shall deal with them according to the Customs Law of the People's Republic of China, and the Detailed Rules for the Implementation of the Customs Administrative Law of the People's Republic of China on Punishment. For those who violate the Criminal Law, the judicial organ shall affix on them the criminal responsibility according to the Law.

Article 36 When provisions contravene the Measures, the Measures shall be followed as the criterion.

Article 37 The General Administration of Customs is responsible for the interpretation of the Measures.

Article 38 The Measures are to be implemented from September 1, 1992.


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