Joint Announcement on the VAT Policies on Drugs for Rare Diseases (Ministry of Finance, General Administration of Customs（i.e. GAC）, State Administration of Taxation and National Medical Products Administration (NMPA) joint announcement [2019] No. 24 )

The Ministry of Finance and three other authorities jointly issued the Notice of VAT Policies on Drugs for Rare Diseases which states that starting 1 March 2019, a general VAT payer who produces, sells, wholesales or retails drugs registered with NMPA for rare diseases may choose to calculate and pay VAT using the simple method at 3%. Imported drugs for rare diseases are subject to this reduced import VAT rate.

 

Announcement on Tax-exempt Import Plans for Seeds and Provenance in 2019 (Ministry of Finance Announcement [2019] No. 7 )

The Customs Tariff Commission of the State Council issued a notice on 11 February 2019, in which it announced that imported seeds (seedlings), breeding stock (poultry), fingerlings (fry), and the provenance of wild animals and plants for breeding will continue to be exempted from import VAT during the period of the 13th Five-Year Plan.

 

Announcement of the Application of Conventional Tariff Rates on Certain Imported Goods under the Free Trade Agreement between the People's Republic of China and the Republic of Chile (Ministry of Finance Announcement [2019] No. 8)

The Customs Tariff Commission of the State Council issued a notice on 12 February, in which it announced the conventional tariff rates that would be applied to certain imported goods from Chile.

 

Announcement of Concerning Matters Related to Innovative Regulatory Measures (“Four Self-services and One Simplification”) in Comprehensive Bonded Zone (i.e. CBZ) (GAC Announcement [2019] No.26 )

GAC announced CBZ regulatory reforms (“Four Self-services and One Simplification”) on 1 February 2019. The model of Four Self-services and One Simplification (i.e. self-registration, self-determined reasonable verification and cancellation cycle, self-verification and declaration, self-paying taxes, and simplification of customs procedures) will be applied to enterprises who are classified as regular credit enterprises and above by the Customs. The announcement entered into force immediately after release.

 

Announcement on Supporting Bonded Research and Development Activities in CBZ (GAC Announcement [2019] No. 27 )

GAC released an announcement with the following provisions on conducting bonded research and development (R&D) activities on 1 February 2019:

• The Announcement shall apply to enterprises in the CBZ that conduct R&D activities on tangible materials and parts, reagents, consumables and samples (hereinafter collectively referred to as “R&D materials and parts”).
• Enterprises in the zones may conduct R&D activities if they meet the following requirements:

1. They are approved by the relevant national departments or CBZ administrative authorities;
2. They are classified as general credit enterprises or above by the Customs;
3.  They possess the premises and equipment required for conducting R&D activities, and are capable of exclusively managing the R&D materials and parts and R&D finished products.

• When conducting any bonded R&D activities, enterprises in the CBZ shall set up an exclusive electronic accounting book and electronically record original accounting information for R&D materials and parts and R&D finished products.

The announcement entered into force immediately after release.

 

Announcement on Supporting Enterprises in CBZ in Conducting Outsourced Processing for Domestic Enterprises Outside of the CBZ (GAC Announcement [2019] No. 28 )

On 1 February 2019 GAC released an announcement with the following provisions with regard to businesses in the CBZ conducting outsourced processing for domestic enterprises outside of the CBZ:

• For the purposes of this announcement, “outsourced processing” refers to instances in which enterprises in the CBZ undertake outsourced business from enterprises outside the CBZ and process the goods, deliver all the processed goods to domestic enterprises outside the zones, charge processing fees, and pay duties to Customs. “Goods outsourced for processing” include materials and parts, finished products, defective products, waste products, by-products and scraps outsourced for processing.
• Enterprises in the CBZ shall not conduct any outsourced processing of goods that are prohibited from being imported or exported by the government.
• An enterprise in the CBZ may conduct outsourced processing if they meet the following requirements:

1. They are classified as general credit enterprises or above by Customs;
2. They possess the premises and equipment required for the processing business, and separately manage and store the outsourced goods for processing and other bonded goods.

The announcement entered into force immediately after release

 

Announcement on Matters Related to the Inspection and Clearance of Foods Entering the CBZ (GAC Announcement [2019] No. 29 )

On 2 February 2019 GAC announced the following regulations with regard to the adoption of a “clearance after sample checking” model for foods entered the CBZ from overseas.

• Foods to be imported into domestic market from the CBZ are subject to qualification examination within the CBZ before clearance. If laboratory testing is necessary, foods could be cleared after samples have been taken on the condition that the following requirements are met:

1. The importer pledges that the imported foods comply with Chinese national food safety standards and relevant inspection requirements;
2. The importer has established and implemented a complete record system for food importation and sales.

• If the imported food is found to be unsafe or unhygienic after the laboratory testing, the importer shall take the initiative to recall them, and undertake corresponding legal liability.

The announcement entered into force immediately after release

 

Announcement on Matters Related to Entering CBZ Before Testing of Animal and Plant Products from overseas (GAC Announcement [2019] No. 36 )

On 27 February 2019 GAC announced regulations with regard to the adoption of a model that the overseas animals and plant products can enter CBZ and then be subject to testing within CBZ. After completing quarantine procedures at entry ports, animals and plant products may enter customs supervised warehouses within the CBZ. The customs will conduct sample testing and comprehensive examinations for such products, and deal with them subsequently based on the testing results.

The announcement entered into force immediately after release.

 

Announcement on the Issuance of Instructions for Customs Clearance at the International Horticultural Exhibition 2019 Beijing, China (“Beijing Expo 2019”) (GAC Announcement [2019] No. 37)

This Announcement shall be applicable during the period in which the Beijing Expo 2019 is being prepared and held. The Announcement clarifies customs matters related to the Beijing Expo 2019 such as customs registration, general guarantees for temporary entry exhibits, entry approval for special exhibits, and customs clearance for entry materials. Please refer to the annexes of the announcement for details.

Beijing Customs Announcement [2019] No. 4 

Beijing Customs has developed a public information services platform called the “Beijing Customs Classification System” (京关归类) for commodity classification purposes, and now it is live. The platform includes three modules:

1. The “clearance data” module covers more than 320 thousand historical classification messages at the Beijing entry port.
2. The “tariff search” module provides the latest information on Customs Import and Export Tariff of People’s Republic of China.
3. The “other search” module contains the following five sub-modules: national key commodities, tariff annotations, national subheading annotations, commodity classification decisions, and administrative rulings on commodity classification.

 

Beijing Customs Announcement [2019] No. 5 

Beijing Customs decided to implement a pilot program under which advanced certified enterprises can apply for exemption from guarantees within its customs.

1. Twenty-three pilot advanced certified enterprises can apply to Beijing Customs for exemption from guarantees. They can perform particular customs formalities with the letter of guarantee after review and approval.
2. Goods for which enterprises may apply for exemption from guarantees include temporary imports and exports, goods imported for maintenance purposes, and goods with pending tax deduction and exemption.
   
3. If a pilot enterprise is subject to credit downgrading, has overdue guarantees, is suspected of smuggling and violating the law, or has defaulted on a tax payment during the guarantee exemption period, the customs may disqualify the guarantee exemption of the enterprise.
4. After one year Beijing Customs will evaluate the pilot program in order to further optimise the application process for guarantee exemptions for advanced certified enterprises.
   

 

Announcement of Relevant Regulations on Managing Bonded Lease Business in Special Customs Supervision Areas in the China (Tianjin) Pilot Free Trade Zone (i.e. Tianjin PFTZ) (Tianjin Customs Announcement [2019] No. 1 )

On 2 February 2019 Tianjin Customs announced regulations on the management of bonded lease business:

1. The Announcement is applicable to bonded lease business in special customs supervision areas in the Tianjin PFTZ.
2. The lessor enterprise shall implement customs handbook management of leased goods in accordance with the prevailing customs regulations and be subject to the Customs’ examinations.
   
3. The lessor or the lessee enterprise shall provide to the Customs the import and export declaration form or the filing list of the leased goods.
   

The announcement entered into force immediately after release.

 

Qingdao Customs Announcement [2019] No. 2 

For the enterprises planning to enter the CBZ and import machinery and equipment for their own use, to earlier apply to the tariff policy of the CBZ, on 21 February 2019 Qingdao Customs released the following announcement:

• Enterprises may apply to the local customs authority for registration beginning on the date when the State Council approves the establishment of the relevant CBZ.
• The enterprise shall submit the following documentation to the customs authority in charge of the CBZ:

1. A written application and a list of machinery and equipment;
2. Supporting evidence issued by the municipal government in charge of the CBZ.

The customs authority in charge of the CBZ shall open an electronic handbook for the machinery and equipment of the qualified enterprises.

• Before the operation of CBZ, enterprises are not allowed to apply to the customs authority for the opening of electronic handbooks other than for machinery and equipment that will be used only for installation and commissioning.

The announcement entered into force immediately after release.

Northen China 
Eric Zhou
China Trade and Customs Services
Lead Partner
Email: ec.zhou@kpmg.com
Tel: +86 (10) 8508 7610

Helen Han    
Partner 
Email:h.han@kpmg.com
Tel:+86 (10) 8508 7627       

Eastern and Western China
Anthony Chau 
Partner
Email: anthony.chau@kpmg.com
Tel: +86 (21) 2212 3206

Dong Cheng
Partner
Email: cheng.dong@kpmg.com
Tel: +86 (21) 2212 3410

Rachel Tao
Director
Email: rachel.tao@kpmg.com
Tel: +86 (21) 2212 3473   

Southern China
Grace Luo
Partner
Email: grace.luo@kpmg.com
Tel: +86 (20) 3813 8609

Vivian Chen
Partner
Email: vivian.w.chen@kpmg.com
Tel: +86 (755) 2547 1198

Phillip Xia
Director
Email: philip.xia@kpmg.com
Tel: +86 (20) 3813 8674

Hong Kong
Daniel Hui    
Partner
Email: daniel.hui@kpmg.com
Tel: +852 2522 7815