Announcement on Adjusting Consumption Tax for Cars

The State Council approved an adjustment to consumption tax for imported cars during the import process as part of an effort to guide rational consumption, adjust income distribution and promote energy conservation and emission reduction. “Ultra-luxury cars” will be added to the list of taxable items under “cars”, according to Caishui [2016] No. 129 released by the Ministry of Finance (MOF) on 30 November, 2016. The consumption tax will cover passenger cars and medium-sized and light commercial buses priced at RMB1.3 million (excluding VAT) or above. In addition, a 10% consumption tax will also be levied during the retail process. According to Caishui [2016] No. 63, Customs will levy consolidated consumption taxes in both the manufacturing (import) process and retail process (10%) for taxable ultra-luxury cars which are priced at RMB1.3 million or above after taxation for cars used by officials in Chinese embassies and consulates in foreign countries, foreign institutions in China and their staff and non-resident permanent staff based on intergovernmental agreements. The announcement has come into effect as of 1 December, 2016.

 

Announcement on Increasing Export Tax Rebate Rate of Mechanical and Electrical Products and Refined oil 

The State Council approved an increase to the export tax rebate rate of cameras, internal combustion engines, gasoline, aviation kerosene and diesel to 17%, according to Caishui [2016] No. 113 released by MOF on 4 November, 2016.

 

Announcement for Promulgating Annotations (Newly Added or Adjusted in 2016 II) on Domestic Subheadings of Customs Import and Export Tariff of the People's Republic of China

To facilitate the consignees and consignors of import and export goods as well as their agents in correctly making declarations for classifications of import and export commodities in accordance with the Customs Import and Export Tariff of the People's Republic of China, the General Administration of Customs (GAC) has, in light of the relevant updated standards and technical developments, newly added and adjusted some annotations on domestic subheadings in the GAC Announcement [2016] No.65, released on 18 November.

Note: The World Customs Organization has modified the Harmonized Commodity Description & Coding System. Modifications have been made for 242 items in the Harmonized System [2017] compared with the Harmonized System [2012].  These modifications mainly focus on highly-concerning environmental and social issues globally, such as food security and environmental protection, and related annotations, items, sub-items and product catalogues have been adjusted. 

 

Announcement on Pilot Usage of “Auxiliary Goods Classification Query System”

GAC began pilot usage of the “auxiliary goods classification query system” and a “classification query function” has been added to the electronic port pre-input system, according to GAC Announcement [2016] No. 66 released on  24 November. With this function, consignees and consignors of import and export goods, as well as their agents, can choose existing classification data corresponding to their goods while making Customs declarations. This Announcement has been effective since 24 November, 2016.

 

Announcement of GAC on Regulating Administration of Consumable Materials Imported Under Processing Trade

GAC will supervise and administrate consumable materials in a bonded manner in order to standardize the administration of consumable materials imported under processing trade, according to GAC Announcement [2016] No. 67 released on 28 November, which will be effective on 1 January, 2017. The import of consumable materials by a processing trade enterprise is not subject to the nature of the enterprise, mode of trade (processing of imported materials or processing of supplied materials) or whether imports are separately declared. If consumable materials are listed in the catalogue of commodities prohibited from processing trade due to dynamic adjustments, these materials shall be administrated as those prohibited from processing trade and are not subject to bonded supervision. If the consumable materials or the finished products thereof are instead sold on the domestic market, Customs shall levy taxes on the consumable materials in accordance with the law and collect additional interest for tax delay. 

 

Announcement on Issues Relating to Commissioned Processing Business in Special Supervision Areas of Customs

GAC requires the enterprises in special supervision areas of Customs to develop special electronic account books (H books) for commissioned processing business in order to standardize administration of the business, according to GAC Announcement [2016] No. 68 released on 29 November. Commissioned processing goods shall be administrated and stored separately from other bonded goods. In principle, materials and parts used for the commissioned processing shall be provided by the enterprises outside the special supervision areas. The enterprises in the areas shall report to Customs in advance if they need to use their bonded materials and parts and shall guarantee the materials and parts entering into the special areas from other domestic areas (outside the special areas) and on which export duties shall be imposed. The Announcement has been effective since the date of promulgation. 

 

Announcement on Issues Relating to Overseas Processing Business 

GAC will regulate commodities processed overseas through preparing account books in order to standardize supervision of the goods, according to GAC Announcement [2016] No. 69 released on 28 November, with a list of documents required having been released. GAC announces that the commodities processed overseas shall be exported and imported back through the same port and related declaration processes have been set out. The Announcement became effective on 30 November.

 

Announcement on Issues Relating to the Implementation of “Registering One Time, Using Many Times” Regarding Account Books in Special Supervision Areas of the Customs 

Information on enterprises and imported and exported goods shall be registered one time, while registering account books in the auxiliary information administration system of Customs in special supervision areas, and can then be used many times in dealing with various formalities with Customs upon approval, according to GAC Announcement [2016] No. 70 released on 30 November. The Announcement has been effective since the date of promulgation.  

 

Announcement on Issues Relating to Supervision of “Spot Bonded Trading of Commodities” in Special Supervision Areas of Customs 

Spot trading commodities shall be registered in advance with Customs by operators of spot markets or third-party public notification agents of warehouse receipts commissioned by them, according to GAC Announcement [2016] No. 71, released on 30 November. Customs formalities of commodities entering into delivery warehouses from overseas or other domestic areas outside the special supervision areas shall be cleared based on existing regulations on import and export of goods. Commodities shall be stored at designated places in delivery warehouses and noticeable signs shall be made there. The Announcement has been effective since the date of promulgation.

 

Announcement on Issues Relating to “Supervisions on Warehouse Goods by Their Status” in Special Supervision Areas of Customs

GAC requires that the operation of non-bonded warehouse goods of enterprises in special supervision areas of Customs shall be submitted to Customs for approval after verification and approval of the Administrative Committee, according to GAC Announcement [2016] No. 72, released on 30 November. Customs can inspect and verify logistics, capital flow and information flow relating to the bonded goods of the enterprises in the areas in accordance with related regulations. The Announcement has been effective since the date of promulgation. 

 

Announcement on Expanding Pilot Reform of Tax Collection and Administration Approach

GAC decided to expand the pilot reform of tax collection and administration approach in order to accelerate the reform process, according to GAC Announcement [2016] No. 73, released on 30 November. The pilot reform will involve commodities listed in the Chapters 84, 85 and 90 of the Import and Export Tariff of the People's Republic of China, which are imported in ports in the Yangtze River Economic Belt (including Shanghai, Nanjing, Hangzhou, Ningbo, Hefei, Nanchang, Wuhan, Changsha, Chongqing, Chengdu, Guiyang and Kunming) and declared to Customs in a paperless manner. The Announcement has been effective since 1 December, 2016. 

 

Regarding some of the above GAC announcements about processing trade and bonded supervision, on 8 December KPMG China published China Tax Alert China Customs promulgated new policy, to promote the innovative development of processing trade (Chinese version), for more detail please click the link.