Measures of the Customs of the People's Republic of China for the Administration of the Duty Reduction and Exemption for Import and Export Goods

Chapter I General Provisions

Article 1 For the purposes of regulating the Customs administration of duty reductions and exemptions for import and export goods, safeguarding the legitimate rights and interests of administrative counterparts, and optimizing the business environment, these Measures are hereby formulated in accordance with the Customs Law of the People's Republic of China (hereinafter referred to as the “Customs Law”), the Tariff Law of the People's Republic of China and other relevant laws and administrative regulations.

Article 2 The Customs shall, according to the Measures, administer the affairs relating to the reduction or exemption of customs duties and import-related taxes for import and export goods (hereinafter referred to as the “duty reduction or exemption”), unless it is otherwise provided for by any laws or administrative regulations.

Article 3 An applicant for duty reduction or exemption for import or export goods (hereinafter referred to as the “applicant”) shall apply to the competent customs office for handling relevant business, such as confirmation of duty reduction or exemption, duty guarantee for the goods subject to duty reduction or exemption, and follow-up administration of the goods subject to duty reduction or exemption.

Where an applicant applies to the competent customs office for handling the business related to duty reduction or exemption, it shall submit complete, valid and duly-filled application materials and take corresponding legal responsibilities for the authenticity, accuracy, completeness and standardization of the materials.

Chapter II Confirmation of Duty Reduction or Exemption

Article 4 Where an applicant applies for duty reduction or exemption for relevant import or export goods under the preferential import or export duty policies, it shall, prior to the declaration of the import or export goods, obtain the materials certifying the qualification for the preferential duty reduction or exemption for the import or export goods according to relevant policies, and apply to the competent customs office for confirmation of duty reduction or exemption upon the strength of following materials:

(1) Application Form for Duty Collection or Exemption for Import or Export Goods.

(2) Certification documents, such as the legal person certificate of a public institution, the document on the formation of a state organ, the registration certificate for a social organization with legal person status, the registration certificate for a private non-enterprise entity with legal person status, or the registration certificate for a foundation with legal person status.

(3) The import or export contract, invoices, and product information on the relevant goods.

Article 5 The competent customs office shall, within 10 working days from the date of acceptance of an application for the confirmation of duty reduction or exemption, examine whether the applicant's entity qualification for duty reduction or exemption, the investment project, and relevant information on import or export goods conform to provisions of the relevant preferential import or export duty policies, and issue its confirmation opinion on duty collection, reduction or exemption for import or export goods, and the Notice of Confirmation of the Customs of the People's Republic of China on Duty Collection or Exemption (hereinafter referred to as “Notice of Confirmation of Duty Collection or Exemption”).

If, under any of the following circumstances, the competent customs office is unable to make a confirmation during the period as specified in paragraph 1 of this Article, it shall explain the reason to the applicant:

(1) There is any ambiguity in the provisions of preferential import or export duty policies, or the administrative functions of other departments are involved, which requires further consultation and confirmation with the relevant departments.

(2) It is necessary to test or authenticate the goods to determine whether they are eligible for relevant preferential import or export duty policies.

Under the circumstances as specified in the paragraph 2 herein, the competent customs office shall, within 10 working days from the date of elimination of the said circumstance, make a confirmation of the duty collection, reduction or exemption for import or export goods, and issue a Notice of Confirmation of Duty Collection or Exemption.

Article 6 Where an applicant needs to modify or revoke a Notice of Confirmation of Duty Collection or Exemption that has been issued, it shall file an application to the competent customs office during the valid period of the Notice of Confirmation of Duty Collection or Exemption, and attach relevant materials.

If, upon examination, the application complies with the relevant provisions, the competent customs office shall permit its modification or revocation. If the modification is permitted, the competent customs office shall issue a new Notice of Confirmation of Duty Collection or Exemption.

Article 7 A Notice of Confirmation of Duty Collection or Exemption shall be valid for not more than 6 months, the applicant shall apply to the Customs at the place of declaration for clearance procedures of the import or export goods during the valid period. Where the applicant is unable to do so during the valid period and an extension is needed, it shall apply to the competent customs office for an extension during the valid period. The validity period of a Notice of Confirmation of Duty Collection or Exemption may be extended only once, and the extension shall not exceed 6 months.

Where a Notice of Confirmation of Duty Collection or Exemption remains unused at the expiration of its validity period, its validity shall be terminated. Where an applicant needs duty reduction or exemption for the import or export of the goods listed in the Notice of Confirmation of Duty Collection or Exemption, it shall file a new application to the competent customs office for confirmation of duty reduction or exemption.

Article 8 Where an applicant files an application for confirmation of duty reduction or exemption after the import or export goods are released with their duties levied, the Customs shall reject the application, unless it is otherwise specified by relevant preferential import or export duty policies or the measures for the implementation thereof.

Chapter III Duty Guarantee for Goods Subject to Duty Reduction or Exemption

Article 9 Under any of the following circumstances, an applicant may apply to the Customs for advance release of goods upon the strength of a duty guarantee:

(1) It is clearly prescribed in relevant preferential import or export duty policies or the measures for the implementation thereof.

(2) The competent customs office has already accepted the application for confirmation of duty reduction or exemption, but has not completed the handling thereof.

(3) The relevant preferential import or export duty policies have already been approved by the State Council, the specific implementation measures have not been clarified, and the competent customs office can confirm that the applicant falls within the scope of those eligible for the said policies.

(4) Other circumstances approved by the General Administration of Customs.

Article 10 Where an applicant needs to undergo the formalities for the advance release of the relevant goods upon the strength of a duty guarantee, it shall, prior to the declaration of the import or export goods, file an application to the competent customs office, and attach relevant materials.

The competent customs office shall issue its opinion on whether to approve the duty guarantee within 5 working days from the date of accepting the application. Where an applicant falls under any of the circumstances as prescribed in Article 9 herein, the competent customs office shall issue a Notice of the Customs of the People's Republic of China of Approving the Duty Guarantee for Goods Subject to Duty Reduction or Exemption (hereinafter referred to as “Notice of Approving the Duty Guarantee”), and notify the customs office at the place of declaration. Where the applicant does not fall under relevant specified circumstances, the competent customs office shall issue a Notice of the Customs of the People's Republic of China of Disapproving the Duty Guarantee for Goods Subject to Duty Reduction or Exemption.

Article 11 The customs office at the place of declaration shall, upon the strength of the Notice of Approving the Duty Guarantee issued by the competent customs office, and the property and rights legally recognized by the Customs as provided by the applicant, undergo the formalities for duty guarantee for goods subject to duty reduction or exemption.

Article 12 The period of duty guarantee for goods subject to duty reduction or exemption as determined in the Notice of Approving the Duty Guarantee shall not exceed 6 months, and the competent customs office may extend the period once for not more than 6 months. Where another extension is required under any special circumstance, it shall be subject to the examination and approval by the district customs.

Where the relevant circumstances specified in Article 9 herein continue at the expiration of the duty guarantee for goods subject to duty reduction or exemption, the competent customs office may, based on the period during which the relevant circumstances are likely to continue, extend the duty guarantee accordingly, inform the applicant of the relevant information, and notify the customs office at the place of declaration to handle the formalities for extension.

Article 13 Where an applicant has obtained a Notice of Confirmation of Duty Collection or Exemption before the expiration of the period of duty guarantee for the goods subject to duty reduction or exemption, and undergone relevant formalities for duty collection, reduction or exemption, the customs office at the place of declaration shall lift the duty guarantee.

Chapter IV Administration of Goods Subject to Duty Reduction or Exemption

Article 14 Unless otherwise provided for by the General Administration of Customs, the customs supervision period for import goods subject to duty reduction or exemption shall be as follows:

(1) Vessels and airplanes: 8 years.

(2) Motor vehicles: 6 years.

(3) Other goods: 3 years.

The customs supervision period shall be calculated from the date of release of the import goods.

Unless otherwise provided for by the General Administration of Customs, during the customs supervision period, the applicant shall preserve and use the import goods subject to duty reduction or exemption according to customs provisions, and be subject to customs supervision according to law.

Article 15 During the customs supervision period, the applicant shall, on or prior to June 30 of each year, submit to the competent customs office the Report on the Use of Goods Subject to Duty Reduction or Exemption, reporting the status of use of the goods subject to duty reduction or exemption. Where it is not submitted during the specified period, the Customs shall include it in the Directory of Enterprises with Abnormal Credit Information in accordance with relevant provisions.

Where an applicant fails to report the status of use of the goods subject to duty reduction or exemption in accordance with the preceding paragraph and applies to the Customs for handling relevant business, such as confirmation of duty reduction or exemption, duty guarantee for the goods subject to duty reduction or exemption, and follow-up administration of the goods subject to duty reduction or exemption, the Customs shall reject its application. The Customs may accept the application after the applicant makes up a report of the relevant information.

Article 16 During the customs supervision period, the goods subject to duty reduction or exemption shall be used at the place examined and approved by the competent customs office. Unless otherwise provided for by the measures for the implementation of preferential import tax policies, where it is necessary to change the place of use of the goods subject to duty reduction or exemption, the applicant shall file an application to the competent customs office and give the reasons therefor. The place of use may be changed upon examination and approval by the competent customs office.

Where it is necessary to use the goods subject to duty reduction or exemption outside the jurisdiction of the competent customs office, the applicant shall apply to the competent customs office for undergoing the formalities for supervision in a different place, and attach relevant materials. After the competent customs office has examined and approved the application and notified the customs office at the place the goods will be transferred to, the applicant may transport the goods subject to duty reduction or exemption to the jurisdiction of the customs office at the place to which the goods are transferred, and be subject to the supervision by the customs office thereof.

After the use of the goods subject to duty reduction or exemption in a different place ends, the applicant shall apply to the customs office at the place to which the goods are transferred for completing the formalities for supervision in a different place in a timely manner. After the customs office at the place where the goods are transferred to examines and approves the application, the applicant shall transport the goods subject to duty reduction or exemption back to the jurisdiction of the competent customs office.

Article 17 Where an applicant undergoes the entity change such as split-up, merger, change of shareholders or restructuring during the customs supervision period, the successor to the rights and obligations of the applicant shall, within 30 days after the registration of the change, report to the competent customs office of the former applicant the entity change and the information on the goods subject to duty reduction or exemption.

Where it is necessary to collect duties in arrears after examination by the customs office of the former applicant, the successor shall pay the duties in arrears to the competent customs office of the former applicant. Where it may continue to enjoy the duty reduction or exemption treatment, the successor shall, under relevant provisions, apply for transfer of the goods subject to duty reduction or exemption, among others.

Article 18 Where an applicant is terminated during the customs supervision period as a result of bankruptcy, cancellation, dissolution， restructuring or any other circumstance, if there is a successor to its rights and obligations, the relevant formalities shall be undergone in accordance with Article 17 herein. If there is no successor to its rights and obligations, the former applicant or any other party that shall be legally obligated to pay customs duties and import-related taxes shall, within 30 days from the date of asset liquidation, apply to the competent customs office of the former applicant for the payment of duties in arrears on the goods subject to duty reduction or exemption. Where it is necessary to obtain a license under the relevant provisions issued by the state for the goods subject to duty reduction or exemption for which no license is required at the time of import, the applicant shall submit the relevant license when undergoing the formalities for paying duties in arrears. The customs supervision over the relevant goods subject to duty reduction or exemption shall be lifted from the date of completion of the aforementioned formalities.

Article 19 Where an applicant requests that the goods subject to duty reduction or exemption are returned abroad or exported during the customs supervision period, it shall be examined and approved by the competent customs office, and the relevant formalities shall be undergone.

The customs supervision over the goods subject to duty reduction or exemption shall be lifted from the date when such goods are returned abroad or exported, and the Customs will no longer collect relevant duties in arrears on goods subject to duty reduction or exemption that are returned abroad or exported.

Article 20 The customs supervision over goods subject to duty reduction or exemption shall be automatically lifted upon expiration of the period of customs supervision.

Where an applicant requests that the supervision over goods subject to duty reduction or exemption during the customs supervision period be lifted ahead of schedule, it shall file an application to the competent customs office and pay the duties in arrears. If it is necessary to obtain a license under the relevant provisions issued by the state for the goods subject to duty reduction or exemption for which no license is required at the time of import, the applicant for duty reduction or exemption shall submit the relevant license when paying the duties in arrears. The customs supervision over the relevant goods subject to duty reduction or exemption shall be lifted from the date of completion of the aforementioned formalities.

The applicant may, within 1 year from the date when the customs supervision over goods subject to duty reduction or exemption is lifted, apply to the competent customs office for a Certificate of the Customs of the People's Republic of China on Lifting Customs Supervision over Import Goods Subject to Duty Reduction or Exemption.

Article 21 During the customs supervision period and within 3 years thereafter, the Customs shall, in accordance with the Customs Law and the Regulation of the People's Republic of China on Customs Inspections and other relevant provisions, conduct inspections of the import and use of the goods subject to duty reduction or exemption by relevant enterprises and entities.

Chapter V Mortgage, Transfer and Use for Other Purposes of Goods Subject to Duty Reduction or Exemption

Article 22 During the period of the customs supervision over the goods subject to duty reduction or exemption, an applicant may mortgage, transfer, use for other purposes or otherwise dispose of the goods subject to duty reduction or exemption, after being examined and approved by the competent customs office and undergoing relevant formalities.

Article 23 Where, during the customs supervision period, an applicant is required to obtain a license under the relevant provisions issued by the state when applying to the competent customs office for mortgaging, transferring, using for other purposes or otherwise disposing of the goods subject to duty reduction or exemption for which no license is required at the time of import, it shall make the obtention of the license.

Article 24 Where, during the customs supervision period, an applicant requests to mortgage the goods subject to duty reduction or exemption for a loan from a bank or non-bank financial institution, it shall file an application to the competent customs office, and attach relevant materials, and provide duty guarantee with the property or rights recognized by the Customs according to law.

The competent customs office shall examine whether the application materials submitted by the applicant are complete and valid, and are filled out in a required manner, among others, and if necessary, may conduct on-site investigations to obtain information on the operating status of the applicant and the use of the goods subject to duty reduction or exemption. Where the materials conform to the provisions upon examination, the competent customs office shall issue a Notice of the Customs of the People's Republic of China of Approving the Mortgage of Goods Subject to Duty Reduction or Exemption for a Loan. Where the materials fail to conform to the provisions, the competent customs office shall issue a Notice of the Customs of the People's Republic of China of Disapproving the Mortgage of Goods Subject to Duty Reduction or Exemption for a Loan.

The applicant may not mortgage the goods subject to duty reduction or exemption for a loan from a natural person, legal person or unincorporated organization other than a bank or non-bank financial institution.

Article 25 Where the customs office approves the mortgage of goods subject to duty reduction or exemption for a loan, the applicant shall, within 30 days as of the date on which the mortgage contract and the loan contract are signed, file the mortgage contract and the loan contract with the competent customs office.

Where the mortgage contract and the loan contract are not signed on the same date, the time limit for filing as prescribed in the preceding paragraph shall start on the later date.

Article 26 Where it is necessary to extend the term of mortgage of the goods subject to duty reduction or exemption for a loan, the applicant shall, before the expiration of the term of mortgage, apply to the competent customs office for extending the term of the loan mortgage.

Where upon examination, the application conforms to the relevant provisions, the competent customs office shall issue a Notice of the Customs of the People's Republic of China of Approving the Extension of Mortgage of Goods Subject to Duty Reduction or Exemption for a Loan. Where the application fails to conform to the relevant provisions, the competent customs office shall issue a Notice of the Customs of the People's Republic of China of Disapproving the Extension of Mortgage of Goods Subject to Duty Reduction or Exemption for a Loan.

Article 27 Where, during the customs supervision period, an applicant needs to transfer the goods subject to duty reduction or exemption to any other entity importing the same goods and enjoying the same preferential duty reduction or exemption treatment, it shall transfer the goods under the following provisions:

(1) The transferor of the goods subject to duty reduction or exemption, shall submit an application to the competent customs office at the place from where the goods are transferred, and attach relevant materials. The competent customs office at the place from where the goods are transferred shall, after examining and approving the application, notify the competent customs office at the place to where the goods are transferred.

(2) The transferee of goods subject to duty reduction or exemption shall submit an application to the competent customs office at the place to where the goods are transferred for confirmation of duty reduction or exemption. The competent customs office at the place to where goods are transferred shall, after examining and approving the application, issue a Notice of Confirmation of Duty Collection or Exemption.

(3) The supervision period for the transferred goods subject to duty reduction or exemption shall be calculated on a continuous basis. The competent customs office at the place to where the goods are transferred shall continue follow-up supervision over the transferred goods subject to duty reduction or exemption during the remaining supervision period.

Where the customs office at the place to where the goods subject to duty reduction or exemption are transferred and the customs office at the place from where the goods subject to duty reduction or exemption are transferred are identical, the provisions in paragraph 1 of this Article shall be followed.

Article 28 Where, during the customs supervision period, an applicant needs to transfer goods subject to duty reduction or exemption to any other entity which does not enjoy the preferential import duty policies or which imports the same goods but does not enjoy the same preferential duty reduction and exemption treatment, it shall apply in advance to the competent customs office for paying the duties in arrears on the goods. Where it is necessary to obtain a license under the relevant provisions issued by the state for the goods subject to duty reduction or exemption for which no license is required at the time of import, the applicant shall submit the relevant license when undergoing the formalities for paying the duties in arrears. The customs supervision over the relevant goods subject to duty reduction or exemption shall be lifted from the date of completion of the aforementioned formalities.

Article 29 Where it is necessary to collect the duties in arrears on the goods subject to duty reduction or exemption due to transfer of the goods, lift of supervision ahead of schedule, change or legal termination of the applicant, or any other reason, the taxable value of goods shall, based on the former taxable value of the goods at the time of import, be depreciated at the ratio of the time period after import of the goods subject to duty reduction or exemption to the custom supervision period. The calculation formula shall be as follows:

Taxable value for collection of duties in arrears = original taxable value of the goods subject to duty reduction or exemption when they were imported ×〔1-the time period after import of the goods subject to duty reduction or exemption/（supervision period×12）〕

The time period after import of the goods subject to duty reduction or exemption shall be calculated in terms of month from the date of release of the said goods. If it is less than 1 month but exceeds 15 days, it shall be counted as 1 month. If it does not exceed 15 days, it shall not be calculated.

Article 30 Where the taxable value of the goods subject to duty reduction or exemption is calculated in accordance with Article 29 herein, the closing date of the time period after import of goods shall be determined according to the following circumstances:

(1) Where the goods subject to duty reduction or exemption are transferred, the closing date shall be the date when the competent customs office accepts the application filed by the applicant for paying the duties in arrears.

(2) Where the applicant transfers the goods subject to duty reduction or exemption without the approval of the customs office, the closing date shall be the date on which the goods are actually transferred; and if the date of actual transfer cannot be determined, the closing date shall be the date when the Customs becomes aware of the transfer.

(3) Where, during the customs supervision period, the applicant undergoes the entity change, the closing date shall be the date of the registration of the change.

(4) Where the business operation of an applicant is terminated for bankruptcy, cancellation, dissolution or other circumstances under which the business is terminated in accordance with the law during the customs supervision period, the closing date shall be the date when the people's court declares the applicant bankrupt or the date when the termination of production and business operation of the applicant is legally determined.

(5) Where the supervision over goods subject to duty reduction or exemption is lifted in advance, the closing date shall be the date when the competent customs office accepts the application filed by the applicant for paying the duties in arrears.

Article 31 Where, during the customs supervision period, an applicant needs to use the goods subject to duty reduction or exemption for other purposes, it shall apply to the competent customs office ahead of schedule. Upon examination and approval by the competent customs office, the applicant may use the goods for other purposes according to the user, the purposes and regions approved by the customs office.

The term “use for other purposes” as mentioned in paragraph 1 of this Article shall include the following circumstances:

(1) Delivering the goods subject to duty reduction or exemption to any entity other than the applicant for use.

(2) Failing to use the goods subject to duty reduction or exemption for the original purposes.

(3) Failing to use the goods subject to duty reduction or exemption within the regions originally determined.

Where the applicant uses the goods subject to duty reduction or exemption for other purposes according to paragraph 1 of this Article, it shall pay corresponding duties in arrears on the basis of the time period for use of the said goods for other purposes, unless otherwise provided for by the General Administration of Customs. Where it is impossible to determine the time period for use of the goods for other purposes, it shall provide a duty guarantee, which shall not be more than the maximum total amount of duties in arrears on the goods that may need to be paid for the remaining supervision period.

Article 32 Where an applicant uses the goods subject to duty reduction or exemption for other purposes, and needs to pay duties in arrears, the taxable value of the goods shall, based on the original taxable value of goods at the time of import, be depreciated at the ratio of the period for which payment of duties in arrears is required to the customs supervision period. The calculation formula shall be as follows:

Taxable value for collection of duties in arrears = original taxable value of the goods subject to duty reduction or exemption when they were imported ×〔the time period for which the payment of duties in arrears is required /（supervision period×365）〕

In the above formula, the period for which the payment of duties in arrears is required shall be the actual time during which the goods subject to duty reduction or exemption are used for other purposes, and be calculated in terms of day. The daily use hours less than or over 8 hours shall be counted as 1 day.

Article 33 When handling the follow-up administration business, such as the loan mortgage, transfer, use for other purposes, supervision in a different place, entity change, return abroad or export, or earlier release from supervision of the goods subject to duty reduction or exemption, the customs office shall, within 10 working days from the date of acceptance of the application filed by an applicant, decide whether to approve the application.

Where the customs office cannot make a decision during the period specified in the preceding paragraph due to any special circumstance, it shall make an explanation to the applicant, and decide whether to approve the application within 10 working days from the date when the special circumstance is eliminated.

Chapter VI Supplemental Provisions

Article 34 Where, during the customs supervision period, an applicant undergoes the entity change such as split-up, merger, change of shareholders or restructuring, or is terminated as a result of bankruptcy, cancellation, dissolution, restructuring or any other circumstance, and the parties involved fails to report to the competent customs office of the former applicant on its entity change or termination, or the information on the goods subject to duty reduction or exemption according to the relevant provisions, the Customs shall give it a warning, order it to take corrective actions, and may impose a fine of not more than 10,000 yuan on it.

Article 35 Definitions of the terms used in these Measures are as follows:

“Applicant for duty reduction or exemption for import and export goods” refers to an enterprise, public institution, social organization, private non-enterprise entity, foundation, or state organ with independent legal person status, which may enjoy import or export duty preferences according to preferential import or export duty policies and relevant laws and administrative regulations, and applies to the Customs for handling relevant duty reduction or exemption business in accordance with these Measures; any unincorporated branch of an investment project entity, which specifically implements the investment project and may apply to the Customs for handling relevant duty reduction or exemption business as authorized by the investment project entity and approved by the customs office at the place where the investment project is located as determined by the competent customs office in accordance with this Article; or any other organization confirmed by the General Administration of Customs.

“Competent customs office of an applicant for duty reduction or exemption” means the customs office at the place where the applicant undergoes the enterprise legal person registration formalities if the applicant is an enterprise legal person; or the customs office at the place where the applicant is domiciled if the applicant is a public institution, social organization, private non-enterprise entity, foundation, state organ or any other non-enterprise incorporated organization; or the customs office at the place where the applicant undergoes business registration formalities if the applicant is an unincorporated branch of an investment project entity, except for the following circumstances:

(1) If the customs office at the place where the investment project is located is not the customs office at the place where the applicant undergoes the enterprise legal person registration formalities or the customs office at the place where the applicant undergoes business registration formalities, the competent customs office shall be the customs office at the place where the investment project is located; and if the place where the investment project is located involves multiple customs offices, the competent customs office shall be the common superior customs office of the relevant customs offices or the customs office designated by the common superior customs office.

(2) The circumstances expressly specified by the measures for implementing relevant preferential import or export duty policies.

(3) Other circumstances approved by the General Administration of Customs.

Article 36 The formats of the documents as listed in these Measures shall be formulated and announced separately by the General Administration of Customs.

Article 37 These Measures shall be subject to interpretation by the General Administration of Customs of the People's Republic of China.

Article 38 These Measures shall come into force on March 1, 2021, upon which the Measures of the Customs of the People's Republic of China for the Administration of the Duty Reduction and Exemption for Import and Export Goods (Decree No. 179, GACC) issued by the General Administration of Customs on December 29, 2008, shall be abolished simultaneously.