[No.148] Decree of the General Administration of Customs of the Peopl's Republic of China NO. 148

The Rules of the General Administration of Customs of the People’s Republic of China for Determination of the Dutiable Value of Import and Export Goods (as revised), which were adopted after deliberations at the Executive Meeting of the General Administration of Customs of the People’s Republic of China on March 8, 2006, are hereby promulgated and shall be effective as of May 1, 2006. The Rules of the General Administration of Customs of the People’s Republic of China for Determination of the Dutiable Value of Import and Export Goods promulgated in the form of Decree No.95 of the General Administration of Customs on December 31, 2001 and the Rules of the General Administration of Customs of the People’s Republic of China for the Evaluation of Royalties and License Fees Related to Import Goods promulgated in the form of Decree No.102 of the General Administration of Customs on May 30, 2003 shall be repealed simultaneously.

Mu Xinsheng

Minister

General Administration of Customs

March 28, 2006

Rules of the General Administration of Customs of the People’s Republic of China for Determination of the Dutiable Value of Import and Export Goods

(Adopted at the Executive Meeting of the General Administration of Customs on March 8, 2006, promulgated by Decree No. 148 of the General Administration of Customs of the People’s Republic of China on March 28, 2006, and effective as of May 1, 2006)

Chapter I General Provisions

Article 1 These Rules are formulated in accordance with the Customs Law of the People’s Republic of China and the Regulations of the People's Republic of China on Import and Export Duties for the purpose of accurately assessing and determining the dutiable value of import and export goods.

Article 2 Customs shall assess and determine the dutiable value of import and export goods pursuant to the principles of objectivity, fairness and uniformity.

Article 3 The assessment and determination of the dutiable value of import and export goods shall be subject to these Rules.

However, these Rules are not applicable to the assessment and determination of the dutiable value of luggage and personal effects of inward passengers, personal postal articles and other personal articles for self use allowed to be brought into the Customs territory, or the dutiable value of import and export goods and articles under suspicion of smuggling.

Article 4 Customs shall，in accordance with relevant national provisions, properly keep the information provided by duty payers which involves commercial secret, and shall not disclose the information to a third party unless otherwise provided for by laws or administrative regulations.

Duty payers may apply to Customs in writing for keeping the confidentiality of its commercial secrets by making a specific list of the contents that need to be covered. However, they shall not refuse to provide Customs with pertinent information by excuse of commercial confidentiality.

Chapter II Dutiable Value of Import Goods

Section I Methods of Determination of the Dutiable Value of Import Goods

Article 5 The dutiable value of import goods shall be determined by Customs on the basis of the transaction value, and shall include the costs of transport and other costs associated therewith as well as the cost of insurance incurred prior to the unloading of the goods at the port or place of entry within the Customs territory of the People's Republic of China.

Article 6 Where the transaction value of the import goods is incompliant with the provisions as prescribed in Section II of this Chapter, or it is impossible to determine the transaction value, Customs shall, after inquiring relevant information and consulting over price with the duty and tax payer, determine the dutiable value by applying the following methods in sequential order:

(a) method of transaction value of identical goods;

(b) method of transaction value of similar goods;

(d) computed method; and

(e) method of reasonable means.

At the request of the duty payer, the order of application of item (c) and item (d) in the preceding paragraph may be reversed, provided that sufficient information has been submitted to Customs

Section II Transaction Value Method

Article 7 The transaction value of import goods is the total price actually paid or payable to the seller by the buyer for the goods sold buy the seller for export to the Customs territory of the People’s Republic of China adjusted in accordance with the provisions of Section III of this Chapter. Payment for the price may be made either directly or indirectly.

Article 8 The transaction value of import goods shall fulfil all of the following conditions:

(a) there must be no restriction on the disposition or use of the import goods by the buyer other than restrictions which are imposed by laws and regulations or are to limit the geographical area for resale or do not have substantial effect on the value of the goods;

(b) the price of the import goods must not be subject to any condition or consideration for which the transaction value cannot be determined with respect to the goods being valued;

(c) no part of the proceeds of any subsequent resale, disposal or use of the import goods by the buyer will accrue directly or indirectly to the seller, or an appropriate adjustment can be made in accordance with the provisions of paragraph 1(d) of Article 11; and

(d) the buyer and seller are not related, or even if so, the relationship did not influence the transaction value under the provisions of Article 17 of these Rules.

Article 9 The disposition or use of the import goods by the buyer shall be deemed as restricted under any of the following circumstances:

(a) the import goods can only be used for displays or complimentary presentations;

(b) the import goods can only be sold to a designated third party;

(c) the import goods can only be sold to the seller or a designated third party after being processed into finished products; or

(d) other cases of restriction on disposition or use of the import goods examined and ascertained by Customs.

Article 10 Under any of the following circumstances, it shall be deemed that the price of the import goods is subject to some condition or consideration for which the transaction value of the goods being valued cannot be determined:

(a) the price of the import goods was established on condition that the buyer must buy other goods from the seller in specified quantities;

(b) the price of the import goods was established on condition that the buyer must sell other goods to the seller; or

(c) other cases where Customs ascertains after examination that the price of the import goods is subject to some condition or consideration for which the transaction value of the goods being valued cannot be determined.

Section III Adjustable Items of Transaction Value

Article 11 In determining the dutiable value of import goods on the basis of the transaction value, the following costs or value, to the extent that they are not included in the price actually paid or payable for the goods being valued, shall be added:

(a) the costs incurred by the buyer:

(i) commissions and brokerage, except buying commissions;

(ii) the cost of containers which are deemed as an integral part of the goods in question;

(iii) the cost of packing whether for labor or materials.

(b) the value, apportioned as appropriate, of the following goods or services supplied by the buyer to the seller free of charge or at a price below cost for use in connection with the production and sale for export of the imported goods to the Customs territory of the People’s Republic of China:

(i) materials, components, parts and similar items incorporated in the import goods;

(ii) tools, moulds and similar items used in the production of the import goods;

(iii) materials consumed in the production of the import goods;

(iv) engineering design, technology research and development, artwork, mapping and other services related thereto undertaken elsewhere than in the Customs territory of the People's Republic of China and necessary for the production of the import goods.

(c) royalties and license fees that the buyer must pay, either directly or indirectly, to the seller or a related party except in either of the following cases:

(i) the royalties and license fees are not related to the import goods being valued; and

(ii) the royalties and license fees are not paid as a condition for the sale of the goods in question to the Customs territory of the People’s Republic of China.

(d) the value of any part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer that accrues directly or indirectly to the seller.

For the above-mentioned costs and value, the duty payer shall provide Customs with information on the basis of objective and quantifiable data. Where such information is not available, Customs shall consult over price with the duty payer and determine the dutiable value by the methods prescribed under the provisions of Article 6 of these Rules.

Article 12 In determining the value of goods to be added to the dutiable value of the import goods as provided for in paragraph 1(b) in Article 11 of these Rules, the following methods of calculation for addition shall be used:

(a) if the goods are bought by the buyer from an unrelated third party, the value to be added shall be the purchase price;

(b) if the goods are produced by the buyer or obtained from a related third party, the value to be added shall be the production cost;

(c) if the goods are obtained on lease by the buyer, the value to be added shall be the lease cost borne by the buyer; and

(d) the value of tools, moulds and similar items used in the production of the import goods shall include the expenses of engineering design, technology research and development, artwork, mapping, etc.

Where the goods have been used by the buyer before being provided to the seller, the value to be added shall be the depreciated value calculated in compliance with generally accepted accounting principles adopted in the People’s Republic of China.

Article 13 Royalties and license fees shall be deemed to be related to the import goods if one of the following conditions is fulfilled:

(a) The royalties and license fees are paid for the rights of patent or know-how, and the import goods fall into any of the following situations:

(i) containing patent or know-how;

(ii) produced using patent methods or patent know-how; or

(iii) specially designed or manufactured to perform the patented process or know-how.

(b) The royalties and license fees are paid for the right of trademark, and the import goods fall into any of the following situations:

(i) bearing trademark;

(ii) can be resold directly with the trademark affixed after importation; or

(iii) containing the right of trademark as being imported, and can be resold with the trademark affixed after minor processing.

(c) The royalties and license fees are paid for the copyright, and the import goods fall into either of the following situations:

(i) containing software, words, music, pictures, images and other similar contents, which are in forms of magnetic tapes and disks, CDs and other similar media; or

(ii) containing other copyrighted contents.

(d) The royalties and license fees are paid for the rights to distribute or resell or other similar rights, and the import goods fall into either of the following situations:

(i) can be resold directly after importation; or

(ii) can be resold directly after minor processing.

Article 14 Where, without payment of royalties and license fees, the buyer cannot buy the import goods or where, without payment of royalties and license fees, the transaction of the goods will not be concluded under the terms and conditions set forth in the sales contract, the payment of royalties and license fees shall be deemed as a condition for the sale of the imported goods to the Customs territory of the People’s Republic of China

Article 15 The following duties, taxes and expenses shall not be added to the dutiable value of the import goods in question, provided that they have been enumerated as separate items in the price terms:

(a) expenses incurred after importation for construction, installation, assemblage, maintenance and technical assistance undertaken on goods such as plant, machinery and equipment, excluding the warranty fees;

(b) the cost of transport, expenses associated with transport and the cost of insurance incurred after the unloading of the goods at the port of entry or place of importation within the Customs territory of the People's Republic of China;

(d) expenses for reproduction of the imported goods in the Customs territory of the People’s Republic of China; or

(e) expenses for technical training within and without the Customs territory of the People’s Republic of China and study tour outside the Customs territory of the People’s Republic of China.

Interest expenses that meet all of the following conditions at the same time shall not be added to the dutiable value:

(a) the interest expenses are duly incurred under a financing arrangement for the purpose of purchasing of the imported goods by the buyer;

(b) the financing arrangement in question was made in a written agreement;

(d) the duty payer can demonstrate that the claimed rate of interest does not exceed the level for such transactions prevailing in the country where, and at the time when the finance was provided, and the price actually paid or payable for the import goods being valued closely approximates to the price of identical or similar imported goods in the absence of the financing arrangement.

Section IV Related Parties

Article 16 The buyer and seller shall be deemed to be related under any of the following circumstances:

(a) they are members of the same family;

(b) they are officers or directors of one another’s businesses;

(d) both of them are directly or indirectly controlled by a third party;

(e) together they directly or indirectly control a third party;

(f) one party directly or indirectly owns, controls or holds 5 percent (5%) or more of the outstanding voting stock or shares of the other party;

(g) one party is an employee, officer or director of the other party; or

(f) the buyer and the seller are legally recognized partners in business.

Where the buyer and the seller are associated in business with each other in that one is the sole agent, sole distributor or sole concessionaire of the other, if they fall within the criteria of the foregoing paragraphs, they shall also be deemed to be related.

Article 17 Even if the seller and the buyer are related, where the duty payer can demonstrate that the transaction value closely approximates to one of the following prices occurring at or about the same time, it shall be deemed that the relationship did not influence the transaction value of the import goods:

(a) the transaction value of identical or similar goods in sales to unrelated buyers for export to the Customs territory of the People’s Republic of China;

(b) the dutiable value of identical or similar goods as determined under Article 22 of these Measures;

In applying the foregoing tests, due account shall be taken of demonstrated differences in commercial levels and quantity levels, and differences in costs when the buyer and the seller are and are not related.

Section V Valuation Methods Other Than Method of Transaction Value

Article 18 The method of transaction value of identical goods refers to the valuation method applied by Customs to determine the dutiable value of import goods on the basis of the transaction value of identical goods imported at or about the same time to the Customs territory of the People's Republic of China as the goods being valued.

Article 19 The method of transaction value of similar goods refers to the valuation method applied by Customs to determine the dutiable value of import goods on the basis of the transaction value of similar goods imported at or about the same time to the Customs territory of the People's Republic of China as the goods being valued.

Article 20 In applying the method of transaction value of identical or similar goods, the transaction value of identical or similar goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the dutiable value of the import goods. In applying the above-mentioned value, an adjustment shall be made to take account of differences in costs and expenses between the import goods and the identical or similar goods in question arising from differences in distances and modes of transport on the basis of objective and quantifiable data.

If, in applying the foregoing paragraph, no such transaction value of identical or similar goods is found, the transaction value of the identical or similar goods sold at a different commercial level and/or in different quantities may be used. In applying the above-mentioned value, an adjustment shall be made to take account of differences in prices, costs or other expenses attributable to commercial level, import quantity, and/or distances and modes of transport on the basis of objective and quantifiable data.

Article 21 In determining the dutiable value of import goods with the application of the method of transaction value of identical or similar goods, the transaction value of the identical or similar goods produced by the same manufacturer shall be used in the first place.

Where the transaction value of the identical or similar goods of the same manufacturer is not found, other transaction values of the identical or similar goods of other manufacturers in the same country or region may be used.

If more than one transaction value of identical or similar goods is found, the lowest value shall be used to determine the dutiable value of the import goods.

Article 22 Deductive method refers to the valuation method applied by Customs to determine the dutiable value of import goods on the basis of the resale price in the Customs territory of the People's Republic of China of the imported goods or identical or similar imported goods, after deduction of costs and expenses incurred within the Customs territory of the People's Republic of China, provided that the resale price meets all of the following conditions at the same time:

(a) it is the price of the imported goods or identical or similar imported goods resold within the Customs territory of the People’s Republic of China at or about the time of importation of the goods being valued;

(b) it is the price of resale of the goods in the condition as imported;

(d) it is the price of resale to an unrelated party within the Customs territory of the People's Republic of China and

(e) it is the price at which the greatest aggregate quantity of the goods have been sold.

Article 23 In determining the dutiable value of import goods with the application of deductive method, the following items shall be deducted:

(a) usual profits, general expenses (either direct or indirect) and commissions usually paid, which are incurred in connection with first sales within the Customs territory of the People's Republic of China of imported goods of the same class or kind as the goods in question;

(b) the cost of transport, expenses associated with transport and the cost of insurance incurred after the unloading of such goods at the port or place of entry within the Customs territory of the People's Republic of China;

Where neither the goods being valued nor the identical and similar goods are sold within the Customs territory of the People's Republic of China in the condition as imported, at the request of the duty payer, the sales price of the goods after further processing may be used to determine the dutiable value, provided that other conditions set in Article 22 of these Rules are satisfied and the value added for such processing shall be deducted.

The added value resulting from further processing provided for in the preceding paragraph shall be calculated on the basis of objective and quantifiable data relating to the cost of processing, in accordance with criteria and methods accepted by the industry and other industrial customary practice.

In determining the items to be deducted under this Article, principles and methods applied shall be consistent with the generally accepted accounting principles adopted in the People's Republic of China.

Article 24 Computed method refers to the valuation method applied by Customs to determine the dutiable value of import goods on the basis of the sum of the following items:

(a) the cost or value of raw materials and processing employed in producing the imported goods;

(b) the usual profits and general expenses (either direct or indirect) of the goods of the same class or kind as the imported goods being valued which are sold for export to the Customs territory of the People’s Republic of China;

(c) the cost of transport, expenses associated with transport and the cost of insurance incurred prior to the unloading of the goods at the port or place of entry within the Customs territory of the People's Republic of China.

In determining the dutiable value of the imported goods under the foregoing paragraph, Customs may conduct on-site verification of the information provided by the producer of the goods in another country with the agreement of the producer and notification in advance to the governments of the country or region in question.

In determining the values or costs under the first paragraph of this article, principles and methods applied shall be consistent with the generally accepted accounting principles applied in the country or region where the goods are produced.

Article 25 Method of reasonable means refers to the valuation method applied by Customs to determine the dutiable value of import goods on the basis of objective and quantifiable data in consistency with the principles prescribed in Article 2 of these Rules, when the dutiable value of the imported goods cannot be determined with the application of transaction value method, method of transaction value of identical or similar goods, deductive method and computed method.

Article 26 In applying the method of reasonable means, no dutiable value shall be determined on the basis of:

(a) the selling price in the Customs territory of the People's Republic of China of the goods produced therein.

(b) the higher of two alternative prices;

(d) the price of identical or similar goods computed other than the values or costs prescribed in Article 24 of these Rules;

(e) the selling price of the goods for export to a third country or region other than the People’s Republic of China;

(f) minimum Customs values, or arbitrary or fictitious values.

Chapter III Dutiable Value of Special Import Goods

Article 27 Where the materials and parts imported for processing purpose or their finished products are leviable at importation, the dutiable value shall be assessed and determined in accordance with the following provisions:

(a) the dutiable value of the imported materials and parts attributed to inward processing with imported materials which are leviable at importation shall be determined on the basis of the transaction value of the materials and parts in question at the time of declaration of entry;

(b) the dutiable value of the materials and parts or their finished products (including defective or substandard products) attributed to inward processing with imported materials but for domestic sale shall be determined on the basis of the original transaction value of the materials and parts at the first time of importation. Where such value is unascertainable, the dutiable value shall be determined on the basis of the transaction value of the imported goods that are identical or similar to the materials and parts in question, at or about the same time when Customs accepts the declaration for domestic sale;

(c) the dutiable value of the materials and parts or their finished products (including defective or substandard products) attributed to job processing with supplied materials but for domestic sale shall be determined on the basis of the transaction value of imported goods that are identical or similar to the materials and parts in question, at or about the same time when Customs accepts the declaration for domestic sale;

(d) the dutiable value of the leftover materials (scraps and wastes or residues) or by-products, which are attributable to processing by a processing enterprise for domestic sale, shall be determined on the basis of the domestic selling price examined and ascertained by Customs;

Where the dutiable value of the processed goods for domestic sale cannot be determined under the provisions of the foregoing paragraphs of this Article, Customs shall determine the dutiable value with the application of reasonable means.

Article 28 The dutiable value of the finished products (including defective or substandard products) which are sold to domestic market by processing enterprises in Export Processing Zones shall be determined on the basis of the transaction value of imported identical or similar goods at or about the same time when Customs accepts the declaration for domestic sale.

The dutiable value of the leftover materials (scraps and wastes or residues) or by-products attributable to processing which are sold by processing enterprises from Export Processing Zones to domestic market shall be determined on the basis of the domestic selling price examined and ascertained by Customs.

Where the dutiable value of the finished products (including defective or substandard products), leftover materials or by-products attributable to processing sold by processing enterprises from Export Processing Zones to domestic market cannot be determined under the provisions of the foregoing two paragraphs of this Article, Customs shall determine the dutiable value with the application of the method of reasonable means.

Article 29 The dutiable value of imported materials and parts or their finished products (including defective or substandard products) sold to domestic market by processing enterprises in Bonded Areas shall be determined on the basis of the transaction value of imported identical or similar goods at or about the same time when Customs accepts the declaration for domestic sale.

Where the finished products attributed to inward processing sold by processing enterprises from Bonded Areas to domestic market are embodied with some domestic materials and parts purchased within the Customs territory of the People’s Republic of China, the dutiable value of such finished products shall be determined on the basis of the transaction value of the materials and parts embodied therein and purchased outside the Customs territory. Where such a value cannot be determined, the dutiable value shall be determined on the basis of the transaction value of the goods identical or similar to the materials and parts embodied therein and purchased outside the Customs territory at or about the same time when Customs accepts the declaration for domestic sale.

Where the finished products attributed to job processing sold by processing enterprises from Bonded Areas to domestic market are embodied with some domestic materials and parts purchased within the Customs territory, the dutiable value of such finished products shall be determined on the basis of the transaction value of the goods identical or similar to the materials and parts embodied therein and purchased outside the Customs territory at or about the same time when Customs accepts the declaration for domestic sale.

The dutiable value of the leftover materials (scraps and wastes or residues) or by-products attributable to processing which are sold by processing enterprises from Bonded Areas to domestic market shall be determined on the basis of the domestic selling price examined and ascertained by Customs.

Where the dutiable value of the finished products (including defective or substandard products), leftover materials or by-products attributable to processing sold by processing enterprises from Bonded Areas to domestic market cannot be determined under the provisions of the foregoing four paragraphs of this Article, Customs shall determine the dutiable value with the application of the method of reasonable means.

Article 30 Where goods leviable are entering the Customs territory from special Customs control areas and premises such as Bonded Areas, Export Processing Zones, Customs Bonded Logistics Parks or Customs Bonded Logistics Centres, the dutiable value shall be determined on the basis of the selling price at the time of entry into the Customs territory from the above-mentioned areas and premises in light of the provisions of Chapter II of these Rules, with materials and parts for processing and the finished products made thereof as only exceptions.

Costs and expenses incidental on warehousing and transportation or other associated expenses incurred within the above-mentioned areas and premises that are not included in the above-mentioned selling price shall be added on the basis of objective and quantifiable data.

Article 31 The dutiable value for machines, tools, means of transport or any other goods, which are transported out of the Customs territory for the purpose of repair with the declaration thereof made to Customs at the time of departure and consequently returned to the Customs territory within the time limit set by Customs, shall be determined on the basis of the expenses of the repairs and the cost of materials, components and parts used in the course of the repairs.

Where the goods fail to be transported back within the time limit specified by Customs, the dutiable value shall be determined in accordance with the provisions of Chapter II of these Rules.

Article 32 The dutiable value of goods which are transported out of the Customs territory for outward processing with the declaration thereof made to Customs at the time of departure and returned to the Customs territory within the time limit set by Customs shall be determined on the basis of the costs of overseas processing and the costs of materials and parts used in the course of processing, and the cost of transport back to the Customs territory, charges associated therewith and the cost of insurance of re-importation.

Where the goods fail to be returned within the time limit specified by Customs, the dutiable value shall be determined in accordance with the provisions of Chapter II of these Rules.

Article 33 The dutiable value of temporarily imported goods with the approval of Customs, when they are subject to import duties and taxes, shall be determined in accordance with the provisions of Chapter II of these Rules. Where the goods for temporary admission are sold to the Customs territory with special approval from Customs, the dutiable value shall be determined on the basis of the purchasing price for home use determined by Customs.

Article 34 The dutiable value of import goods on lease shall be determined in accordance with the following means:

(a) the dutiable value of import goods on lease with payment in form of rental charges shall be determined on the basis of the rental charges examined and ascertained by Customs during the lease period with the interest charges thereof added;

(b) the dutiable value of the leased import goods which are purchased for home use shall be determined on the basis of the purchasing price examined and ascertained by Customs;

(c) where the duty payer applies for one-off payment of import duties and taxes, the dutiable value may be determined either by the methods prescribed under the provisions of Article 6 of these Rules at the request of the duty payer, or on the basis of the total rental charges examined and ascertained by Customs.

Article 35 The dutiable value of the goods which were duty-exempted or duty-reduced and are subject to recovery of Customs duties and taxes shall be determined on the basis of the original value of the goods ascertained at the time of importation, deducting all the value depreciated. The formula shall be expressed as follows:

Dutiable value = dutiable value determined at the time of entry

The elapsed time after importation and before the recovery of duties (in term of months)

X (1 - ----------------------------------------- )

Statutory years of Customs control X 12

In the above formula, the elapsed time after importation and before the recovery of duties shall be calculated in terms of months. If the time is less than a month but more than 15 days, it shall be calculated as a month; if the time is less than 15 days, it shall not be calculated.

Article 36 When there is no transaction value, as for imported goods by way of barter, consignment, donation and complimentary presentation etc., Customs shall determine the dutiable value by applying the methods prescribed under the provisions of Article 6 of these Rules after having consulted over price with the duty payer.

Article 37 The dutiable value of imported carrier media bearing software especially for data processing equipment shall be determined on the basis of the value or cost of the carrier media itself, under either of the following circumstances:

(a) the value or cost of the carrier media and the value of the software contained therein are listed separately; or

(b) the duty payer can either furnish documentary evidences to prove the cost or value of the imported carrier media itself, or the value of the software, even though the value of software so loaded is not distinguished from the cost or the value of the carrier media.

The foregoing paragraphs shall not be applicable to carrier media containing beaux-arts, photography, sound, cinematographic or video recordings, games, and electronic publications etc.

Chapter IV Calculation of the Costs of Transport and Other Expenses Associated Therewith, and the Costof Insurance in the Dutiable Value of Import Goods

Article 38 The cost of transport for import goods shall be calculated on the basis of charges that are actually paid. Where the cost of transport is unascertainable, however, Customs shall calculate the cost en facto for transportation or on the basis of the freight rate or freight amount for the carriage of the goods published by the shipping industry at the time of importation.

Where the vehicles themselves are treated as import goods and transported by using their own power, no cost of transport shall be added to the dutiable value in determining the dutiable value.

Article 39 The cost of insurance for import goods shall be calculated on the basis of the charges actually paid. If the cost of insurance for imported goods is unascertainable or does not occur in practice, Customs shall calculate the cost of insurance on the basis of 3‰ of the sum of C & F. The formula shall be expressed as follows:

The cost of insurance = (Cost of Goods + Freight) ×3‰

Article 40 For goods imported by mail, postage alone shall be treated as the costs of transport and other charges associated with transport, and the cost of insurance.

Article 41 Where goods are imported by railway or highway and transacted in the terms of Delivered at Frontier (DAF), Customs shall calculate the costs of transport and other charges associated with transport, and the cost of insurance, on the basis of 1% of the DAF value of the said goods.

Chapter V Dutiable Value of Export Goods

Article 42 The dutiable value of export goods shall be determined by Customs on the basis of the transaction value, including the inland costs of transport and other charges associated therewith, and the cost of insurance incurred prior to loading of the goods at the port or place of departure within the Customs territory of the People's Republic of China.

Article 43 The transaction value of export goods shall be the total payment collected or to be collected, directly or indirectly, by the seller from the buyer for the goods when sold for export to the outside of the Customs territory of the People's Republic of China.

Article 44 The following duties and charges shall not be added to the dutiable value of export goods:

(a) export duties;

(b) the costs of transport and other charges associated therewith, and the cost of insurance which are incurred after loading of the export goods at the port or place of departure within the Customs territory of the People's Republic of China but listed separately in the payment of the goods;

Article 45 Where the dutiable value of export goods cannot be determined, Customs shall, after having inquired relevant information and consulted over price with the duty payer, determine the dutiable value by applying the following methods in their given order:

(a) transaction value of the identical goods exported to the same country or region at or about the same time;

(b) transaction value of the similar goods exported to the same country or region at or about the same time;

(c) value calculated on the basis of cost, profit and general expenses (either direct or indirect) for producing the identical or similar goods, and cost of transportation and charges associated therewith, and cost of insurance incurred within the Customs territory;

(d) value determined by the method of reasonable means.

Chapter VI Examination and Verification of Dutiable Value

Article 46 When making declarations to Customs, the duty payer shall submit truthful and accurate documents including invoice, contract, bill of lading, and packing list according to the provisions of the Rules.

Required by Customs, the duty payer shall also furnish Customs with legal payment instruments related to transaction and other supplemental commercial documents, information or data, in writing or electronic, reflecting the truth and accuracy of the transaction value.

Where there is any of the adjustments of value prescribed under the provisions of Section III of Chapter II of these Rules in the sale of goods, the duty payer shall make a declaration to Customs strictly according to the facts.

Where the foregoing adjustments of value need to be apportioned, the duty payer shall do it on the basis of objective and quantifiable criterion, and at the same time provide Customs with proof of the apportionment.

Article 47 To examine and verify the truth or accuracy of the declared value, Customs may exercise the following authorities to check the declared value:

(a) to examine and copy the contracts, invoices, account books, certificates for foreign exchange settlement and/or payment, bills, business correspondences and faxes, audio or video products in relation with the import goods and other commercial bills, written information and electronic data reflecting the relationship and transaction activities between the buyer and the seller;

(b) to interview the duty payer of import or export goods and citizens, legal persons and other organizations having monetary or other business relationship with the duty payer to inquire into the matters concerning the dutiable value of the import or export goods;

(d) to enter into the obligatory duty payer’s production and operation premises and warehousing facilities to examine the goods and operations relating to the import or export goods;

(e) with approval of director general of regional Customs directly under the General Administration of Customs of the P.R.C or of director of local Customs authorized by the former and by showing Notice of Account Inquiry of Customs of the People’s Republic of China (See Attachment 1) and Customs officers’ identity cards, to inquire information relating to collection and payment in the company accounts opened with the bank or other financial institution by the obligatory duty payer, and deliver to the banking supervisor agency relevant information; and

(f) to inquire tax authorities of the situation and consequences concerning the payment of internal taxes in relation to the imported and exported goods.

When Customs exercises the above authorities, the duty payer and relevant citizens, legal persons and other organizations are obliged to provide truthful information, and submit relevant documentary evidence in written or electronic forms. No refusal, delay or concealment is allowed.

Article 48 Where Custom has doubts about the truth or accuracy of the value declared by the duty payer, or considering the special relationship between the buyer and the seller did influence the price, Customs shall issue Notice to Query Declared Value by Customs of the People’s Republic of China (hereinafter referred to as Notice to Query Declared Value; see Attachment 2) and notify the duty payer or his agent of the grounds for doubts in written form. The duty payer or his agent shall, within 5 working days as of the date of receipt of the Notice to Query Declared Value, provide related documents or other evidence in writing that could demonstrate the truth or accuracy of the declared value or the declared value not being influenced by the special relationship between the buyer and seller.

If having due cause for not being able to provide the above-mentioned information within the time limit, the duty payer or his agent may, in written form, apply to Customs for extension prior to the expiration of the time limit.

Except under special circumstances, the extension shall not exceed 10 working days.

Article 49 Once the Notice to Query Declared Value is issued, Customs shall, after having a process of consultation over the price with the duty payer, determine the dutiable value of the import or export goods with the application of the methods listed in Article 6 or Article 45 of these Rules, under any of the following circumstances:

(a) the duty payer or his agent fails to provide further explanation within the time limit;

(b) Customs, after examining the document or evidence provided by the duty payer or his agent, still has reasonable doubts about the truth or accuracy of the declared value; or

(c) Customs still, after examining the document or evidence provided by the duty payer or his agent, has reasonable doubts that the special relationship between the buyer and the seller did influence the transaction value.

Article 50 Where after examination, Customs determines that the import goods have no transaction value, then valuation query may not be made. Customs shall determine the dutiable value with the application of the methods laid down in Article 6 of these Rules after having consulted over price with the duty payer.

Where after examination, Customs determines that the export goods have no transaction value, valuation query may not be made, and after having consulted over price with the duty payer, Customs shall determine the dutiable value with the application of the methods laid down in Article 45 of these Rules.

Article 51 When Customs notifies the duty payer to consult over price according to the provisions of these Rules, the duty payer shall, within 5 working days as of the date of receipt of the Notice of Valuation Consultation of Customs of the People’s Republic of China (see Attachment 3), engage in the valuation consultation with Customs. Where the obligatory duty payer fails to engage in the valuation consultation with Customs within the time limit, it is deemed that he has given up his right of valuation consultation, and Customs may directly determine the dutiable value of the import or export goods with the application of the methods laid down in Article 6 or Article 45 of these Rules.

When conducting the valuation consultation with the duty payer in accordance with provisions of these Rules, Customs shall prepare a Record Sheet for Valuation Consultation by Customs of the People’s Republic of China (see Attachment 4).

Article 52 Under any of the following circumstances, upon written request by the duty payer, Customs may not launch a valuation query and not perform valuation consultation and thus determine the dutiable value of the import or export goods with the application of the methods laid down in Article 6 or Article 45 of these Rules:

(a) goods are imported or exported in repeated shipments under the same contract and Customs has determined the dutiable value of goods in one of the previous shipment;

(b) the Dutiable value of import or export goods is below RMB 100,000 yuan or the total amount of the Customs duties and import taxes levied by Customs is below RMB 20,000 yuan; or

(c) import or export goods are by nature hazardous goods, fresh live goods, perishable goods, vulnerable goods, wasted and used goods, etc..

Article 53 In cases prescribed in Articles 27, 28 and 29 of these Rules, Customs may, after having a process of consultation over price with the duty payer, determine the dutiable value of import goods with the application of the methods laid down in Article 6 of these Rules without any valuation query.

In cases prescribed in Articles 27, 28 and 29 of these Rules, Customs may, upon written request by the duty payer, determine the dutiable value of import goods with the application of the methods laid down in Article 6 of these Rules without having a process of valuation consultation.

Article 54 When Customs is in the course of determining the dutiable value of import and export goods, the duty payer shall be able to claim the goods from Customs after providing guarantee to Customs according to law.

Article 55 After the determination of the dutiable value of import or export goods by Customs, the duty payer may, in the form of written request, ask for an explanation in writing from Customs as to how the dutiable value of his goods has been determined. Once so requested, Customs shall issue a Notification of Determination of Customs Value by Customs of the People’s Republic of China (see Attachment 5).

Chapter VII Supplementary Provisions

Article 56 For the purposes of these Rules:

“Customs territory” refers to the Customs territory of the People’s Republic of China.

“Dutiable value” means the value used by Customs for the purpose of levying Customs duties.

“Buyer” means any natural person, legal person or other organization that buys goods by fulfilling his payment obligation, bearing the risks for the goods, and as such obtaining incomes. Buyer of imported goods means anyone who buys imported goods into the Customs territory of the People’s Republic of China.

“Seller” means any natural person, legal person or other organization that sells goods. Seller of imported goods means anyone who sells imported goods into the Customs territory of the People’s Republic of China.

“Sold for export to the Customs territory of the People’s Republic of China” means the act of actually bringing the imported goods into the Customs territory of the People’s Republic of China, transferring the ownership or title of the goods and risks by the seller to the buyer, and making payment therefor by the buyer to the seller.

“Price actually paid or payable” means the total payment to buy the import goods, directly or indirectly made, or to be made, by the buyer to the seller or for the benefit of the seller to a third party, as a condition for the sale of the imported goods from the seller.

“Indirect payment” means the total payment made, or to be made, in whole or in part, by the buyer to a third party, upon the seller’s request; or the payment made, or to be made, to offset the differences involved in other collections and payments between the buyer and the seller.

“Buying commissions” means any fees paid by a buyer to the buyer’s agent for the service in the purchase of the imported goods.

“Brokerage fees” means any service fee paid by the buyer to the broker on behalf of the interests of both the buyer and the seller for the service in the purchase of the imported goods.

“Identical goods” means goods produced in the same country or region as the import goods are, which are the same in all respects, including physical characteristics, quality and reputation. However, minor differences in appearance shall not preclude goods otherwise conforming to the definition from being regarded as identical.

“Similar goods” means goods produced in the same country or region as the import goods are, which, although not alike in all respects, have like characteristic and like component materials which enable them to perform the same functions and to be commercially interchangeable.

"About the same time” means within 45 days before or after the date of Customs’ acceptance of declaration of the imported goods being valued. In determining the dutiable value of the import goods with the application of deductive method, if imported goods and identical or similar goods were not sold within the Customs territory within 45 days before or after the date of Customs’ acceptance of declaration of the imported goods being valued, the time for sale within the Customs territory may be extended to 90 days before or after the date of Customs’ acceptance of declaration of the imported goods being valued.

“Generally accepted accounting principles” refers to any accounting principles, norms and methods generally recognized in relevant countries or regions, including accrual method, matching method, historical cost method and division of revenue expenditure method and capital expenditure method, which are related to the determination of the value of the goods.

“Royalties and license fees” means any fee paid by the buyer to intellectual property right-holders or persons duly authorized by the right-holders for authorized use or transfer of patents, trademarks, know-how, copyrights, the right to distribute, the right to sell and other rights relating to the import goods.

“Technical training expenses” means all the expenses borne by the buyer of the import goods on the basis of the technical training on the import goods offered by the seller or a third party related to the seller to the technical personnel assigned by the buyer, including trainers’ salary and trainees’ expenses related to training itself, boarding and lodging, transportation and medical care.

“Software” means any program or document used by data processing equipment prescribed in the Regulations on Protection of Computer Software.

“Know-how” means any undisclosed knowledge, experience, methods, techniques and skills concerning technological process, formula, product design, quality control, examination and test, marketing management, etc., expressed in forms of blueprints, models, technical data and standards.

“Minor processing” means diluting, mixing, sorting out, primary assembling, repacking, or other similar processing.

“Goods of the same class or kind” means goods which fall within a group or range of goods produced by a particular industry or industry sector, and includes identical or similar goods.

“Carrier media” refers to any goods falling into tariff heading 85.24 in the Customs Tariff of Import and Export of the People’s Republic of China.

“Valuation examination and verification” means that for the purpose of determination of the dutiable value of import or export goods, Customs exercises its legal authorities prescribed under the provisions of Article 47 of these Measures in order to check out whether the declared value of the import goods is true or accurate, whether the buyer and the seller are related and whether such a relationship did influence the transaction value by examining documents, verifying data, inspecting physical goods and related account books.

“Valuation consultation” means that when applying the valuation methods other than the transaction value method, on the basis of keeping commercial secret confidential, Customs offers to exchange information and data with the obligatory duty payer for the purpose of determination of the dutiable value.

Article 57 The duty payer who dissents from the decision by Customs on the Customs valuation shall pay duties and taxes first, according to relevant administrative decisions made by Customs, and may submit an appeal for reconsideration of the case to Customs at a higher level in accordance with law. Should the duty payer refuse to accept the decision on the appeal, he may lodge an administrative lawsuit to the People’s Court according to law.

Article 58 Any action in violation of these Rules which constitutes smuggling or violates Customs regulatory provisions shall be dealt with by Customs in accordance with the Customs Law of the People’s Republic of China and the Regulations of the People’s Republic of China on Implementing Customs Administrative Penalty. Where the violation constitutes a crime, it shall be subject to criminal penalty according to relevant laws.

Article 59 These Rules shall be interpreted by the General Administration of Customs of the People’s Republic of China.

Article 60 These Rules shall be effective as of May 1, 2006, where upon the Rules of the General Administration of Customs of the People’s Republic of China for Determination of the Dutiable Value of Import and Export Goods promulgated in the form of Decree No. 95 of the General Administration of Customs on December 31, 2001 and the Rules of the General Administration of Customs of the People’s Republic of China for the Evaluation of Royalties and License Fees Related to Import Goods promulgated in the form of Decree No. 102 of the General Administration of Customs on May 30, 2003 shall be repealed simultaneously.

(All information in this document is authentic in Chinese. English is provided for reference only. In case of any discrepancy, the Chinese version shall prevail. )

Recommended:

Recently Read:

About GACC

Mission

The Minister

Principal Officials

Organizational Structure

Quick Link

China Customs Statistics

Online Interview

Service Guide

Clearance Status

Characteristic Service

Friendly Links