Repair Business in Special Customs Supervision Zones
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1 Repair Business in Special Customs Supervision Zones January 2013 China Customs and Trade News
2 Further to the Guidelines on Promoting the Development of Special Customs Supervision Zones promulgated by the State Council (Guofa [2012] No.58), which we brought up for attention in our last edition of Trade Alert publication in early December 2012, the General Administration of Customs (GAC) issued an official Notice circulated for implementation by Customs nationwide, aiming to clarify the Repair Business take place in Special Customs Supervision Zones (Shujiafa [2012] No.455). PwC 1
3 Scope of Business and Qualifications Applicable Special Customs Supervision Zones ( the Bonded Zones ) Scope of Repair Business Enterprise Qualifications (located in the Bonded Zones) Export Processing Zone (EPZ) Integrated Bonded Zone (IBZ) Bonded Port Zone (BPZ) Repair Business permitted / approved as per the prevailing laws and regulations in China Repair Business approved by the State Council and the relevant authorities on a case-by-case basis Pilot repair programs approved by the GAC Having a computer management system (CMS) to meet the requirements of customs supervision, which enables online data exchange through the network with Customs Adopting internal management at a Part Number level which can distinguish goods for repair or parts to be used for repair from local or overseas markets; the matching of parts used for repair and repaired goods should be available Able to dispose the repair wastes and repair scraps/leftover according to the prevailing regulations in China PwC 2
4 Implementation Measures The key implementation measures promulgated in the Notice mainly include the following: Goods entering the Bonded Zones for repair from domestic China Goods entering the Bonded Zones for repair but cannot be repaired Disposal of Wastes, Scraps/ Leftover Treated as Outbound Repair Import tax (duty/ import VAT) to be imposed based on the repair fee Export VAT Refund not applicable Sourced from overseas: return to overseas in the original state; Sourced from domestic: returned to the non-supervision areas in China in the original state Wastes, scraps/leftover which cannot be returned to overseas; Shujiafa [2009] No.172 and AQSIQ Order No.12 should apply PwC 3
5 Summary & PwC Observations The issuance of Shujiafa [2012] No.455 could be considered as one of the implementation actions support to Guofa [2012] No.58). More related circulars and implementation measures are expected. It is the first time for GAC to clarify the Repair Business scope and the qualification of the enterprise to be engaged in repair in a Bonded Zone. Repair operation outside Bonded Zones remains less clear. Shujiafa [2012] No.455 provides detail supervision measures including E-handbook set up, Trade Mode for declaration, and the requirement for a periodical report on the actual inbound, outbound and storage status of goods for repair, goods repaired, materials used for repair, disposal of scraps/ leftover, etc. to guide the enterprise in operation. PwC 4
6 Contacts For further assistance about PwC s customs and international trade services please contact: Damon Paling Partner, Shanghai +86 (21) damon.ross.paling@cn.pwc.com Colbert Lam Partner, Hong Kong colbert.ky.lam@hk.pwc.com Derek WC Lee Partner, Hong Kong derek.wc.lee@hk.pwc.com Susan Ju Partner, Beijing +86 (10) susan.ju@cn.pwc.com Min an Qian Director, Shanghai +86 (21) minan.qian@cn.pwc.com For more information, please also visit: PwC Customs & International Trade Practice Customs and international trade in China is complex. However, a planned and structured approach with the right resources assigned results in cost savings, higher levels of compliance and fewer unwanted surprises during an audit. PwC specialists within our Greater China customs and international trade practice provide a wide range of advice and services related to creating value, ensuring compliance, and managing risk in relation to the movement of goods into and out of China. PwC 5
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