32 Customs Duties/Tariffs

TARIFF PAYERS

TARIFF BASE AND SCOPE

TARIFF RATES AND TARIFFS PER UNIT

COMPUTATION METHODS

REDUCTIONS AND EXEMPTIONS

REFUNDS

PAYMENT PROCEDURES AND POLICIES

SPECIAL RULES AND PROCEDURES FOR CERTAIN GOODS

EXERCISE OF SPECIAL TARIFFS

Customs duties/tariffs are levied on goods or articles that are imported or exported across China's borders or through Customs. They are a popular form of taxation with many administrations around the world. The Regulations on Import and Export Duties of the People's Republic of China currently in force were promulgated by the State Council on November 23, 2003, and came into effect on January 1, 2004.

Customs duties/tariffs are collected and administered by the General Administration of Customs. The revenue collected belongs to the Central Government. In 2003, revenue from Customs duties/tariffs amounted to 92.31 billion yuan, accounting for about 4.6% of the country's total tax revenue.

TARIFF PAYERS

The following entities may be subject to tariffs:

• Consignees that import goods permitted by China to enter China: Import tariffs apply.
• Consignors that export goods permitted by China to leave China: Export tariffs apply.
• Owners of articles permitted by China to enter China: Import tariffs apply.

Where entities procure goods produced originally in China by re-importing the goods into China, these goods shall also be subject to import tariffs.

Entrusted Agents

Consignees/Consignors

Where consignees import goods or consignors export goods, they may choose either of the following modes of handling the Customs formalities involved, unless otherwise stipulated:

• They may themselves complete the relevant Customs declarations and other formalities, including the payment of relevant duties.
• They may entrust registered enterprises that are approved by Customs to handle Customs declarations to handle the declaration formalities on their behalf.

Owners

Owners of permitted articles may choose either of the following modes of handling the Customs formalities involved:

• They may themselves complete the relevant Customs declaration and other formalities.
• They may entrust others to handle the Customs declarations on their behalf.

TARIFF BASE AND SCOPE

General Guidelines

The tariff payable on goods specified as being dutiable goods is calculated based on the dutiable price of the goods and the applicable tariff rates.

This section also discusses briefly the formulation and interpretation of tariff policies, as well as the implementation of special tariff measures.

What Constitutes Dutiable Goods

Any goods imported into or exported out of China may be subject to Customs tariffs.

Various categories of dutiable goods are laid out in the Classifications of Import and Export of the People's Republic of China, and the applicable tariff rates, in the Import Tariff Rate Table of the People's Republic of China for Incoming Articles (see excerpt in Table 32.1), both formulated by the State Council.

Various principles govern the imposition of tariffs on imported and exported goods. These will be discussed later.

What Constitutes Dutiable Price for Imports

The dutiable price of imported goods shall be assessed by Customs based on the transacted price of the goods, discussed later.

It shall include freight charges incurred to transport the goods to the point of entry, but not unloading charges, related expenses, or premiums paid for insurance coverage on the goods while in transit.

Transacted Price

The transacted price of the goods refers to the total importation charges payable and paid, by the buyers to the sellers, at the time that the goods are sold in China.

In accordance with prevailing rules, the transacted price shall be adjusted to reflect items such as prices directly or indirectly paid.

Caveats

The transacted price can be used to compute the dutiable price only if the following criteria are satisfied:

• In general, there should be no restrictions on the disposal or use of the goods by the buyers. Certain exceptions are allowed, such as those restrictions imposed by law or administrative regulations, those that govern the place of resale, and those that have no substantial effect on the price of the goods.
• The transacted price should not be difficult to determine even where the sale of the goods is complicated by certain circumstances (e.g., where the goods are sold together with other goods as a single product).
• The sellers should not gain any direct or indirect benefits from the buyers for the resale, disposal, or use of the goods after importation. Where the sellers do gain some benefits, it must still be possible to make appropriate adjustments in accordance with the rules.
• There should no special relationship between the buyers and the sellers. Where a relationship does exist, it should not has any impact on the transacted price.

Items To Be Included in the Dutiable Price

Certain expenses incurred in the course of importing goods should be included in the dutiable price of the goods.

• Where brokerage charges or commissions, other than purchasing commissions, are borne by the buyers, these items should be included.
• Where expenses are incurred on containers, where the containers are deemed to be an integral part of the goods, and where the expenses are borne by the buyers, the expenses should be included.
• Where expenses are incurred on packaging materials and charges for packaging services, and where the expenses are borne by the buyers, the expenses should be included.
• Where materials or parts, modules, consumable materials, or similar items that are relevant to the production or in-China sales of imported goods, are included with the goods; where the buyers offer the items free of charge, or at prices that are below their actual cost; and where the proportionate value of the items can be ascertained appropriately, the prices of the items should be included.
• Where expenses are incurred on overseas development or design services, the expenses should be included.
• Where the buyers have to pay royalties as a condition for selling the goods within China, the royalties should be included.
• Where the sellers gain direct or indirect benefits from the buyers for the resale, disposal, or use of the goods after importation, the benefits should be included.

Items To Be Excluded from the Dutiable Price

Certain taxes paid or expenses listed in the prices of imported goods should not be included in the dutiable price of the goods.

• Where factory houses, machinery, or equipment are/is imported, and where expenses are incurred, after importation, on related construction, installation, assembly, repair, or technical services, the expenses should be excluded.
• Where expenses or insurance premiums are incurred on the transportation of the goods after the goods have been unloaded at the entry points, the expenses or premiums should be excluded.
• Import duties and domestic taxes, such as VAT and income tax, should be excluded.

Assessed Price

Where the transacted price of imported goods does not satisfy any of the earlier criteria, or where it is difficult to ascertain, Customs may assess the dutiable price of the goods using the methods discussed later (in the order prescribed), after assessing the circumstances and negotiating the price with the tariff payers.

Where the tariff payers provide relevant materials to Customs, they may apply to reverse the order of Methods 3 and 4 when assessment is carried out.

Method 1

Assessment shall be based on the transacted price achieved for goods of the same type as the goods in question that are sold within China at the same time as the goods in question or at a similar time.

Method 2

Assessment shall be based on the transacted price achieved for goods of a similar type as the goods in question that are sold within China at the same time as the goods in question or at a similar time.

Method 3

Assessment shall be based on the unit price achieved in the best sales to unrelated buyers at the first sales stage within China, or based on the unit price of goods of the same type or a similar type as the goods in question that are sold at the same time as the goods in question or within a prescribed period of the sale in question.

However, the following items should be deducted:

• Standard sales profits achieved, at the first sales stage within China, for goods of the same grade or a similar kind.
• Standard expenses incurred for goods of the same grade or a similar kind.
• Standard commissions paid for goods of the same grade or a similar kind.
• Expenses and insurance premiums related to transportation after the goods arrive, but before they are unloaded within China.
• Import duties and internal taxes.

Method 4

The assessed price shall be computed by adding together the following items:

• The cost of the materials used to manufacture the goods.
• Processing expenses incurred on manufacturing the goods.
• Standard profits earned from the sales of goods of same type or grade within China.
• Standard expenses incurred on the sales of goods of same type or grade within China.
• Expenses and insurance premiums related to transportation after the goods arrive, but before they are unloaded within China.

Method 5

Assessment shall be based on prices estimated using other reasonable methods.

Special Instances

Under the circumstances described below, the dutiable price shall be determined in the following ways:

Leased Goods

Where goods are imported in the form of leasing, the dutiable price shall be the rental, as confirmed by Customs.

Lump-Sum Tariff Payments

Where the tariff payers apply to pay the tariff in a lump sum, they may choose to have the dutiable price assessed in accordance with the rules described previously, or to have the dutiable price taken as the total rental, as assessed by Customs.

Goods Sent Abroad for Processing

Where goods are sent abroad for processing, the dutiable price shall be assessed based on the following items, provided the goods are declared to Customs at the time of exportation, and re-imported within the prescribed time limit:

• Overseas processing fees.
• Material costs.
• Freight charges, other relevant expenses, and insurance premiums related to re-transportation of the goods to China.

Goods Sent Abroad for Repair

Where the following items are sent abroad for repair, the dutiable price shall be assessed based on standard charges for repairs carried out overseas, and materials or parts used overseas, provided the items are declared to Customs at the time of exportation, and re-imported within the prescribed time limit:

• Machinery.
• Appliances.
• Means of conveyance.
• Other goods.

What Constitutes Dutiable Price for Exports

The dutiable price of exported goods shall be assessed by Customs based on the transacted price of the goods, discussed later.

It shall include freight charges incurred to transport the goods to the point of exit, but not unloading charges, related expenses, or insurance premiums.

Transacted Price

The transacted price of the goods refers to the total exportation charges directly and indirectly received, by the sellers from the buyers, at the time that the goods are exported.

Items To Be Included in/Excluded from the Dutiable Price

Export duties are not included.

Whether other costs, expenses, or taxes should be included or excluded, shall be decided based on objective, quantitative data.

Assessed Price

Where the transacted price of exported goods is difficult to ascertain, Customs may assess the dutiable price of the goods using the methods discussed later (in the order prescribed), after assessing the circumstances and negotiating the price with the tariff payers.

Method 1

Assessment shall be based on the transacted price achieved for goods of the same type as the goods in question, that are exported to the same country or region as the goods in question, at the same time as the sale in question or at a similar time.

Method 2

Assessment shall be based on the transacted price achieved for goods of a similar type as the goods in question, that are exported to the same country or region as the goods in question, at the same time as the sale in question or at a similar time.

Method 3

The assessed price shall be computed by adding together the following items:

• Material costs.
• Processing expenses that would be incurred on manufacturing goods of the same type or a similar type within China.
• Standard profits.
• Standard expenses.
• Expenses and insurance premiums related to transportation of the goods after arrival but before unloading within China.

Method 4

Assessment shall be based on prices estimated using other reasonable methods.

Policy Formulation and Interpretation

The State Council formulates the Classifications of Import and Export of the People's Republic of China. It also formulates the Import Tariff Rate Table of the People's Republic of China for Incoming Articles, which stipulates tariff items, tariff classification numbers, and rates (central components in the regulation of import and export tariffs).

To standardize and streamline policy formulation and implementation, the State Council has set up the Tariff and Classification Committee to take charge of the following responsibilities:

• Adjusting and interpreting the Import and Export Classifications.
• Adjusting the items, tariff classification numbers, and rates listed in the Import Tariff Rate Table (see excerpt in Table 32.1). The Committee's decisions shall be reported to the State Council for execution.
• Deciding which goods shall be subject to provisional tariff rates, and which rates and time limits shall be imposed.
• Deciding which quota tariff rates shall apply to quota items.
• Deciding whether to levy anti-dumping, anti-subsidy, guaranty measure, retaliatory, or other special measure tariffs.
• Deciding whether to apply tariffs under special circumstances.
• Other functions as assigned by the State Council.

Special Measure Tariffs

Under certain circumstances, it may be necessary for China to impose anti-dumping, anti-subsidy, or guaranty measures on imported goods, in accordance with relevant laws and administrative regulations.

In such cases, tariff rates shall be applied in accordance with relevant rules laid out in the following Regulations promulgated by the State Council:

• The Regulations of the People's Republic of China on Anti-dumping Measures.
• The Regulations of the People's Republic of China on Anti-Subsidy Measures.
• The Regulations of the People's Republic of China on Guaranty Measures.

Retaliatory Tariffs

Under the following circumstances, China may impose retaliatory tariffs on imported goods originating from a particular country or region:

• Where the country or region imposes prohibitive or restrictive trade measures against China.
• Where it imposes additional tariffs on China's goods.
• Where it imposes other measures that affect normal trade in violation of trade agreements or other relevant agreements that China has concluded or participated in.

In such cases, the Tariff and Classification Committee shall decide the following:

• Which goods should be subject to retaliatory tariffs.
• Which countries retaliatory tariffs should apply to.
• Which tariff rates should apply.
• Which time limits should apply.
• Which collection methods should be used.

TARIFF RATES AND TARIFFS PER UNIT

This section discusses the main tariff rate categories for both imports and exports, and how applicable rates and effective dates are determined.

It also highlights some recent developments and rate changes.

General Guidelines

Both imported and exported goods may be subject to tariffs.

The applicable rates may be derived in the following ways:

• Based on value.
• Based on quantity.
• Based on some other method specified by the State.

Import Tariffs

Tariff rates for imported goods vary depending on the point of origin of the goods and other circumstances. The main rate categories are discussed later.

Resolving Rate Conflicts

Some goods may be subject to two or more rates. In such cases, the lowest rate shall apply.

Main Rate Categories

The main categories are discussed below.

• Rates for most-favored nations (MFNs).
• Convention rates.
• Special treatment rates.
• General rates.
• Quota rates.

Also, provisional rates may be adopted for specified imported goods for specified periods.

MFN Rates

These rates apply to goods originating from the following countries or regions:

• WTO member countries that are normally eligible for MFN status under WTO regulations.
• Countries or regions with which the People's Republic of China has concluded trade treaties or agreements that contain reciprocal favorable tariff clauses.
• China itself.

Convention Rates

These rates apply to goods originating from signatories to regional trade conventions to which China is also a signatory, where these conventions offer relevant preferential clauses relating to Customs duties.

Special Treatment Rates

These rates apply to goods originating from countries or regions with which China has concluded special agreements on preferential Customs duties.

Where goods are simultaneously subject to MFN, convention, and special treatment rates, the lowest rate shall apply.

General Rates

These rates apply to goods originating from countries or regions other than those discussed above, or to goods whose precise origins are difficult to determine.

Quota Rates

Where quotas have been imposed on goods under State rules, rates shall be applied in the following manner:

• For that portion of the goods that falls within the quota: Quota rates shall apply.
• For that portion of goods that exceeds the quota: MFN, convention, special treatment, general, or provisional rates shall apply, as stipulated by the rules.

Provisional Rates

Certain goods are eligible for provisional rates. However, whether provisional rates can be applied to the goods, depends on which rates the goods are normally subject to.

• Goods subject to MFN rates: Provisional rates shall apply.
• Goods subject to convention rates: The lower rates shall apply.
• Goods subject to general rates: Such goods are not eligible for provisional rates.

Determination of Appropriate Rate Reductions

In accordance with relevant State policies on the reduction of import duties, when assessing appropriate tariff reductions for goods, Customs shall first determine if the goods are subject to MFN rates.

Then, it shall consider the origins of the goods and the scope of the various applicable rates. Where convention or special treatment rates apply to goods eligible for provisional rates, the provisional rates shall apply if they are lower.

Export Tariffs

Tariffs may be imposed on exported goods under various circumstances.

Provisional Rates

Certain goods subject to export tariffs may be eligible for provisional rates for a certain period.

Under such circumstances, the provisional rates shall apply.

Determining Applicable Rates and Effective Dates

When determining the applicable tariff rates for goods undergoing import or export, Customs shall take all the following into consideration:

• Customs regulations governing the application of MFN rates, convention rates, special preferential rates, general rates, quota rates, export rates, and provisional rates.
• Rules governing the application of tariff rates when anti-dumping measures, anti-subsidy measures, guaranty measures, or retaliatory tariffs are adopted.

Effective Date

Overall Imports and Exports

In general, for both imports and exports, Customs shall apply the tariff rates effective on the date that Customs accepts the import/export declaration.

• Imports declared before arrival: Where Customs grants permission for the declaration to be made before the arrival of the goods, it shall apply the rates in force on the date of entry of the means of conveyance used to carry the goods.
• Imports in transit: Where the goods imported are in transit to a designated destination, the rates applied shall be those in force on the date that Customs at the designated destination accepts the declaration.

  Where Customs grants permission for the declaration to be made before arrival, the rates applied shall be those in force on the date that the means of conveyance used to carry the goods arrives at the designated destination.

• Exports in transit: Where the goods exported are in transit to a designated departure point, the rates applied shall be those in force on the date that Customs at the designated departure point accepts the declaration.
• Consolidated declarations: Where Customs grants permission for declarations to be made on a consolidated basis for imports/exports, the rates applied shall be those in force on the date that Customs accepts the declaration for each batch of imports/exports being consolidated.
• Imports whose declarations are overdue: Where imported goods are sold by Customs, in accordance with prevailing rules, because the declaration is overdue, the rates applied shall be those in force on the date that the means of conveyance used to carry the goods is declared for entry.
• Contravention of rules: Where Customs needs to pursue tariffs on imports/exports because the tariff payers have contravened prevailing rules, the rates applied shall be those in force on the date that the act of contravention occurs.

  Where the date of contravention is hard to pinpoint, the rates applied shall be those in force on the date that Customs discovers the act of contravention.

Special Instances

For the following types of goods, certain circumstances, discussed later, may arise under which tariffs need to be paid on the goods. If such is the case, the rates applied shall be those in force on the date that Customs accepts the second round of declaration submitted by the tariff payers relating to tariff matters and relevant formalities.

• Bonded goods.
• Goods subject to tariff reductions or exemptions.
• Goods temporarily imported/exported that have been declared for entry and released already.
• Leased goods that have been declared for entry and released already.

Below are listed the applicable circumstances under which tariffs need to be paid on the types of goods described above:

• Where bonded goods are transported out of China unless they receive approval not to be shipped out of China.
• Where goods in bonded warehouses are released for sale in the domestic market.
• Where goods subject to tariff reductions or exemptions are transferred to other Customs destinations or turned to other uses, upon approval from Customs.
• Where temporary imports and exports of goods that are temporarily exempt from tariffs are not transported out of China or into China upon approval.
• Where rental for leased imports is paid in installments.

Recent Developments and Rate Changes

China's tariff policies have undergone major changes in recent years. As a result, tariffs on both imported and exported goods have changed significantly.

Imports

In recent years, in order to facilitate the development of foreign economic trade and cooperation, China has lowered many import tariff rates.

The average rate fell from 43.2% in 1992 to 35.9% in 1994, 23.0% in 1996, and 17.0% in 1997. From 1999, it recorded a fall every year.

Since January 1, 2005, it has fallen to 9.9%.

Tariff Classifications and Applicable Rates

As of 2005, there were 7,550 classifications of imported goods subject to tariffs, as listed in the Import and Export Classifications.

Most of these categories are subject to flat, value-based rates (MFN rates: 0%–65%; general rates: 0%–270%). Several categories are subject to quantity-based rates (e.g., frozen chicken, beer, crude oil) or compound rates (e.g., video players, digital cameras).

At present, imported goods are subject mainly to MFN rates (which have been formulated in such a way that they actually embody State economic and foreign trade policies).

As of 2005, China adopted provisional MFN rates for 233 classifications of goods.

Some of the rates are value-based, ranging from 0% to 40% (0% for phosphoric acid, 2.5% for liquid crystal displays, 5% for wind power-generating facilities, 10% for natural latex, 15% for cocoa fat, 22% for ceramic tiles, 40% for reproductive tobacco).

Rates for some other classifications are quantity based.

Exports

Tariff Classifications and Applicable Rates

As of 2005, there were 37 classifications of exported goods subject to tariffs.

These goods comprise mainly un-reproducible resource products, and raw materials in shortage domestically and restricted from exportation.

There are five rates applied, ranging from 20% to 50%.

• 20% for tungsten ore and their refined minerals, eel fry, and goat skin.
• 25% for ferrosilicon.
• 30% for lead and zinc ores, and their refined minerals.
• 40% for benzene and chromium iron.
• 50% for tin ores and their refined minerals.

China has adopted provisional MFN rates for 26 classifications of exported goods, ranging from 0% to 20%.

• 0% for benzene, silicon iron, and aluminum products.
• 5% for manganese iron and unforged aluminum.
• 10% for eel fry, phosphorus, and unrefined copper.
• 20% for tin ores and their refined minerals.

For urea, the tariff rate is quantity based.

COMPUTATION METHODS

This section discusses not only how to compute tariffs payable, but also the factors that affect tariff computation, and how exchange rate conversions are handled.

General Guidelines

Tariffs are levied on goods in various ways.

• Based on value.
• Based on quantity.
• Based on some other method specified by the State.

  Tariffs payable on goods are calculated after taking the following details into consideration:

• The classification that the goods fall under (as specified by the Import and Export Classifications).
• The dutiable price of the goods.
• The origin of the goods.
• The applicable tariff rates.
• The applicable exchange rates.

Computing Tariff Payable

Based on Dutiable Price

Where the tariff is based on the dutiable price of the goods, the following formula is used to calculate the tariff payable:

Tariff payable = Dutiable price of goods × Applicable tariff rate

Based on Quantity

Where the tariff is based on the quantity of the goods, the following formula is used to calculate the tariff payable:

Tariff payable = Quantity of dutiable goods × Applicable tariff per unit

Based on Multiple Tariffs

Where multiple tariffs apply, the following formula is used to calculate the tariff payable:

Tariff payable = (Dutiable price of goods × Applicable tariff rate) + (Quantity of dutiable goods × Applicable tariff per unit)

Example

An enterprise imported 10 tower cranes, each of which is worth 2 million yuan. The MFN rate is 10%; the general rate, 30%.

Tariff payable using MFN rate = 10 cranes × 2 million yuan × 10% = 2 million yuan

Tariff payable using general rate = 10 cranes × 2 million yuan × 30% = 6 million yuan

Example

A company imported 10,000 kg of frozen chicken wings (wing tips excluded). The MFN tariff is 0.9 yuan/kg; the general rate is 8.1 yuan/kg.

Tariff payable using MFN rate = 10,000 kg × 0.9 yuan/kg = 9,000 yuan

Tariff payable using general rate = 10,000 kg × 8.1 yuan/kg = 81,000 yuan

Exchange Rate Conversions

Tariffs payable are calculated in yuan terms.

Where the price of the goods or relevant expenses are quoted in foreign currency, Customs shall convert the figures into yuan at the exchange rate quoted on the date that it decides on the applicable tariff rate to be used for computing the dutiable price of the goods.

In general, the exchange rates used by Customs each month for tariff computations are the standard exchange rates for the more common currencies, as quoted by the People's Bank of China on the third Wednesday of the preceding month. Where the third Wednesday falls on a statutory holiday, the rates used will be those quoted on the fourth Wednesday.

For the less common currencies, the conversion shall be based on the simple average (taken to the fourth decimal place) of the buying and selling prices (taken at the same point in time) of the currencies, as quoted by the People's Bank of China.

Where exchange-rate fluctuations are severe, exchange rates may be stipulated and published separately if the General Administration of Customs deems such a measure necessary.

REDUCTIONS AND EXEMPTIONS

Reductions or exemptions may be granted for imported/exported goods under various circumstances.

Imported/exported goods that may be granted exemptions include the following items:

• Goods itemized within one receipt, whose tariff amounts to less than 50 yuan.
• Goods for advertising purposes or trade samples that have no commercial value.
• Materials received as gifts, free of charge, from international organizations or foreign governments.
• Fuels, materials, or beverages used for entry/exit transportation tools during the loading of goods.

Major Categories

Goods Damaged or Lost Before Release

Where goods are damaged or lost before they are released by Customs, reductions or exemptions may be granted. For damaged goods, any reductions or exemptions granted will be based on the extent of the damage to the goods.

However, the tariff payers must explain the circumstances to Customs, and provide the relevant documents or other forms of substantiation, either at the time of declaration, or within 15 days of the scheduled date of release.

Where necessary, Customs may request the tariff payers to provide inspection reports issued by quality commodities inspection institutions, attesting to the extent of the damage.

Goods Entitled by Law

Where goods are entitled to exemptions or reductions by law (e.g., goods or articles so stipulated in international conventions that China has concluded or participated in), Customs may provide reductions or exemptions in accordance with prevailing rules.

For imported goods that fall into this category, reductions or exemptions will also be granted for Value-Added Tax (VAT) and Consumption Tax, at the importation stage.

Special Areas, Specific Enterprises, Special Purposes

Exemptions or reductions, or temporary exemptions or reductions, may be granted to goods intended for use in special areas, by specific enterprises, or for special purposes, in accordance with rules laid out by the State Council.

Goods that enjoy such exemptions or reductions shall be used only in the special areas, by the specific enterprises, or for the special purposes in question. They cannot be used in other areas, by other enterprises, or for other purposes, unless approval is granted by Customs, and the relevant tariffs are first paid.

Items Imported by Enterprises or Projects

Where enterprises or projects import equipment for self-use, or where they import technology, accessories, or parts together with equipment for self-use, as stipulated in the contracts, exemptions may be granted under certain circumstances, discussed below.

Imports for Advanced Technology Products

Where the items are imported by enterprises for the production of items specified in the State High and New Technology Products Catalog formulated by the Ministry of Science and Technology of China, exemptions may be granted.

Imports for Software Enterprises

Where the items are imported by software enterprises, exemptions may be granted.

Imports Funded by the Total Investment Sum

Where the imports are funded by enterprises or projects out of their total investment sums, exemptions may be granted under certain circumstances, discussed below:

• Where the items are imported by a foreign investment project, or by a domestic investment project that is encouraged and supported for development by the State, exemptions may be granted.
• Where the items are imported by research and development centers with foreign investment, exemptions may be granted.
• Where the items are imported for projects that are in line with those set out in the catalogs of advantageous industries and projects for utilizing foreign capital, as formulated by the People's Government at the provincial level in the central and western parts of China, exemptions may be granted.

Some preferential treatment may be granted where the enterprises or projects fund the imports with funds of their own, beyond the total investment sum.

Imports Funded Outside the Total Investment Sum

Where the items are imported by the following enterprises, within the approved scope of production or business, using funds of their own, beyond their total investment sums:

• Enterprises with foreign investment.
• Research and development centers with foreign investment.
• Enterprises with foreign investment that are involved in export-oriented advanced technology, and that belong to the encouraged or limited B categories.

Commodities Imported by Border Residents

Exemptions may be granted for commodities imported by border residents through mutual market trade. The daily limit on the commodity value is 3,000 yuan per person.

VAT and Consumption Tax exemptions shall also be granted, at the importation stage.

Materials or Parts Imported for Processing

Where materials or parts intended for processing are imported as bonded items, Customs may levy tariffs in accordance with prevailing rules, if the finished products, or the materials or parts, are not exported within the time limits specified by prevailing rules.

Where import tariffs are collected on the materials or parts, Customs may pay back the tariffs collected at the importation stage, in accordance with prevailing rules, if the finished products, or the materials or parts, are exported within the time limits specified by prevailing rules.

Others

• Where equipment is imported using loans from foreign governments or international financial organizations, exemptions may be granted.
• Where enterprises make overseas payments for software, as contractually stipulated, in order to import advanced technology of a type listed in the State High and New Technology Products Catalog, exemptions may be granted.
• Where integrated circuit manufacturing enterprises import certain types of integrated circuit equipment or apparatus, and they are the sole importers, or where integrated circuit manufacturing enterprises import integrated circuit technology or complete sets of production equipment, in accordance with State rules, exemptions may be granted.
• Where integrated circuit manufacturing enterprises import raw materials or consumables for self-use, in accordance with State rules, exemptions may be granted.
• Where articles for science and research or teaching are imported in accordance with State rules, exemptions may be granted
• Where the articles are imported specially for use by the disabled, exemptions may be granted.
• Where the imported materials are donated for poverty alleviation or to charitable causes, exemptions may be granted.

REFUNDS

Overall Procedures

Tariff payers that wish to apply for refunds on tariffs already paid on imported/exported goods, should follow the procedures discussed below.

The circumstances under which refunds may be granted are discussed later.

Applying for Refunds

Where tariff payers wish to apply for refunds, they should submit their reasons, in writing, to Customs, and provide the following documentation:

• The original import/export declaration forms.
• The tariff payment memoranda.
• Relevant invoices.
• Other relevant materials.

The applications must be made within 1 year of the date that the tariffs were paid.

Processing by Customs

After receiving the refund applications, Customs shall process them in the following manner:

• Where the tariff payers provide complete and appropriate documentation, Customs shall accept the application. The date on which the application was received shall be taken as the date of acceptance.
• Where the documentation is incomplete or inappropriate, Customs shall, within 5 working days of the date that the documentation was received, notify the tariff payers which documentation is still needed. The date that Customs receives complete documentation shall be treated as the date of acceptance.

  Where necessary, Customs may request the tariff payers to provide inspection reports issued by qualified commodities inspection institutions (attesting to relevant shortcomings in the goods such as poor quality, mistaken specifications, damage, or shortfalls in quantity), or other relevant documentation.

• Within 30 days of the date of acceptance, Customs shall verify the application.

Notification

Where the application is approved, the tariff payers shall be notified to complete the refund formalities.

Where the application is rejected, the tariff payers shall be notified that no refunds will be forthcoming.

Completing Refund Formalities

The tariff payers should complete the refund formalities within 3 months of the date that they receive notification from Customs that their application has been approved.

Any interest collected from the tariff payers for late payment of tariffs shall not be included in the refund.

Major Categories

Under the following circumstances, tariff payers may apply to Customs for the refund of tariffs already paid on goods imported/exported:

• The imported goods are returned and transported out of China because they are of poor quality or fail to meet product specifications.
• The exported goods are returned and transported into China because the goods are of poor quality or fail to meet product specifications, and where the relevant domestic taxes (e.g., VAT, income tax) refunded for the export of the goods are made good.
• The exported goods have not been loaded or exported for various reasons, and the goods are declared for Customs return.

Payments Returned, Compensation Received for Shortfalls in Bulk Imports/Exports

Where all of the following circumstances apply, and where tariffs have been paid on payments returned or compensation received, the tariff payers may apply to Customs for refunds:

• The goods were imported/exported in bulk.
• There was a shortfall in the goods.
• The goods have been released.
• The consignors of the goods, the carriers, or the insurance companies have returned payments collected for the goods, or paid compensation for the shortfall.

The application procedure is the same as for other refund applications.

Compensation Paid for Shortcomings in Goods

Where imported or exported goods have the following shortcomings, and where tariffs have been paid on compensation received from the consignors of the goods, the carriers, or the insurance companies, for the shortcomings, the tariff payers may apply to Customs for refunds:

• Damage.
• Poor quality.
• Failure to meet specifications.
• Other shortcomings.

The application procedure is the same as for other refund applications.

PAYMENT PROCEDURES AND POLICIES

This section discusses the various procedures under which tariffs are paid for goods imported/exported.

• Declaration of the goods by the tariff payers.
• Issuance of the tariff payment memorandum by Customs.
• Payment of the tariffs.

Procedures and Time Limits

Declaring Entry/Exit of Goods

Imports

The tariff payers shall declare to Customs the entry of the goods within 14 days of the date that the entry of the means of conveyance is declared.

Where approval is granted by Customs, the tariff payers may make declarations in advance, before the arrival of the goods.

Exports

Unless granted special permission by Customs to do otherwise, the tariff payers shall declare to Customs the exit of the goods after the goods are delivered to the Customs monitoring zone but at least 24 hours before the goods are loaded.

Issuing Tariff Payment Memoranda

In general, Customs shall issue the tariff payment memorandum when the goods actually arrive in China. The formalities (acceptance of the declaration, and verification of the acceptance) shall be completed on the spot.

Where the following details have to be checked and confirmed, the memorandum shall be issued or adjusted after the checks and verification have been conducted:

• The commodity type.
• The dutiable price.
• The origin of the goods.

Payment of Tariffs

Payers of tariffs on imports/exports shall pay the tariffs to the designated banks within 15 days of the date that Customs issues the tariff payment memorandum.

Payers of tariffs on articles carried in or out of China by individuals shall pay the tariffs before the articles are released.

SPECIAL RULES AND PROCEDURES FOR CERTAIN GOODS

The following categories of goods are subject to special rules and procedures for declaration, tariff computation and tariff payment, discussed later:

• Goods compensated without cost.
• Goods imported by way of leasing.
• Goods that are temporarily imported/exported.
• Goods entering or leaving China for repair.
• Goods leaving China for processing.
• Goods returned.

Goods Compensated without Cost

General Guidelines

Where imported or exported goods have the following shortcomings, and where the consignors of the goods, the carriers, or the insurance companies offer other goods in compensation, or replace the goods with equivalent goods or with goods that match the contract specifications, after the goods have been released by Customs, the substituted goods are referred to as goods compensated without cost:

• Damage.
• Poor quality.
• Failure to meet specifications.

Exemptions

• Compensated goods: No import tariffs are levied on the goods on importation. No export tariffs are levied on the goods on exportation.
• Original goods: No export tariffs are levied when the goods are returned and transported outside China. No import tariffs are levied when the goods are returned and transported into China.

  Where tariff payers import/export compensated goods, they should follow the procedures discussed below for declaration and tariff payment.

  Variations under the following circumstances are also discussed:

• The compensated goods do not match the original goods or the contract specifications.
• The original goods are not returned to their country of origin, or not handed over to Customs.

Declaration Procedures

The tariff payers shall submit the following documentation to Customs, within the claim period specified in the original import/export contracts, and within 3 years of the import/export of the original goods:

• The declaration form filed for the original import/export of the goods.
• The tariff payment memorandum or the duty-free certificate issued for the original import/export of the goods.
• The claim agreements signed by the buyers and the sellers.

Where Customs believes additional documentation is necessary, the tariff payers shall also provide the inspection report or other relevant substantiating documents issued by qualified commodities inspection institutions, attesting to the following shortcomings in the original goods imported/exported:

• Damage.
• Shortfall.
• Poor quality.
• Failure to meet specifications.

Compensated Goods Do Not Match Original or Specifications

Where the compensated goods are not equivalent to the original goods, or where they do not match the contractual specifications, the tariff payers should provide reasons to Customs.

Where Customs finds the reasons acceptable, and where the classification numbers of the compensated goods do not differ significantly from those of the original goods, Customs shall proceed to determine the dutiable price of the compensated goods and the tariff payable on them.

Tariff Computation Rules

Customs shall determine the dutiable price of the compensated goods in accordance with the relevant rules for assessing the dutiable prices of imported/exported goods, and based on the exchange rates and tariff rates applicable for the original import and export of the goods.

Where the tariff payable on the compensated goods does not match the tariff paid on the original goods, Customs shall make the following assessment:

• Where the tariff payable exceeds the tariff paid on the original goods, the deficiency shall be made good by the tariff payers.
• Where the tariff payable is less than the tariff paid on the original goods, and where the consignors, the carriers, or the insurance companies of the original goods have made compensation to the tariff payers, Customs shall reimburse the tariff paid on the original goods, in proportion to the tariff paid on the compensation.
• Where no compensation is made, the difference between the tariff payable and the tariff paid shall not be rebated.

Unacceptable Variations in Classification

Where the classification numbers of the substituted goods vary significantly from the classification numbers of the original goods, the rules discussed above shall not apply.

Customs shall levy tariffs according to the standard rules governing the import/export of goods.

Original Goods Are Not Returned or Handed Over

Tariff Computation Rules

In either of the following situations, when the tariff payers declare the compensated goods, Customs shall reassess the dutiable price of the original goods based on the tariff rates and exchange rates applicable on the date of declaration, and in accordance with the relevant rules:

• The original imports are not returned abroad or handed over to Customs for handling.
• The original exports are not returned to China.

Imports of Leased Goods

General Guidelines

Where tariff payers import leased goods, they should follow the procedures discussed below for declaration, control-and-monitor, and tariff payment.

Variations under the following circumstances are also discussed:

• The goods are retained for purchase.
• The goods continue to be leased.

Declaration Procedures

Unless otherwise stipulated, tariff payers that import leased goods should settle import and tariff payment formalities related to the goods, including declaration of the goods, with the Customs offices in their locales.

At the time of declaration, the tariff payers should submit to Customs the leasing contract and other relevant documents.

Where Customs believes it is necessary, the tariff payers shall lodge with Customs a specified sum of money as a guaranty that they will pay the tariffs later.

Control-and-Monitor Procedures

The goods shall be controlled and monitored by Customs from the date the goods enter China until the date that the lease ends and until the date that Customs completes all relevant formalities.

Tariff payers should complete control and monitor formalities with Customs, and re-transport the goods out of China within 30 days of the date that the leasing term expires.

Tariff Payment Procedures

Lump-Sum Rental

Where tariff payers pay rental on the leased goods in a lump sum, they should settle the tariff payment formalities and make the tariff payments at the time that they declare the importation of the goods.

Rental by Installment

Where tariff payers pay rental on the leased goods in installments, they should settle the tariff payment formalities for the first installment and make the relevant tariff payment at the time that they declare the importation of the goods.

For the remaining installments, the tariff payers should settle the formalities with Customs within 15 days of each installment payment.

Late Payments

Where tariff payers fail to declare the goods or to make tariff payments for the goods within the specified time limits, Customs shall compute the tariff payable on the goods based on the tariff rates and exchange rates applicable on the 15th day after each rental payment.

Customs shall also charge interest on the tariff arrears that are due (the percentage is 0.05%, the same hereinafter).

Goods Retained for Purchase

Control-and-Monitor Procedures

Where tariff payers need to retain and purchase the goods, they should settle the relevant formalities with Customs within 30 days of the date that the leasing term expires.

Where the leasing terminates before the leasing term expires, the date that the leasing terminates shall be treated as the expiry date of the leasing term.

Tariff Computation Rules

Customs shall compute the dutiable price and tariff payable for the retained goods in accordance with rules governing the determination of dutiable prices for imported goods, and based on the tariff rates and exchange rates applicable on the date that Customs accepts the declaration of the retention and purchase of the goods in question.

Where tariff payers fail to declare the retained goods or to make tariff payments for the goods within the specified time limits, Customs shall compute the tariff payable on the goods in accordance with the rules governing the determination of dutiable prices for imported goods, and based on the tariff rates and exchange rates applicable on the 30th day after the date that the leasing term expires.

Customs shall also charge interest on the tariff arrears that are due.

Goods that Continue To Be Leased

Declaration Procedures

The tariff payers should declare the goods in accordance with the relevant rules.

At the time of declaration, they should provide the contract for continued leasing to Customs.

Control-and-Monitor Procedures

Where tariff payers continue to lease the goods, they should settle the relevant formalities with Customs within 30 days of the date that the leasing term expires.

Where the leasing terminates before the leasing term expires, the date that the leasing terminates shall be treated as the expiry date of the leasing term.

Tariff Computation Rules

Where the tariff payers fail to complete the formalities for continued leasing of the goods within the specified time limits, Customs shall levy the tariff payable on the goods.

Customs shall also charge interest on the tariff arrears that are due.

Temporary Import/Export of Goods

General Guidelines

Where tariff payers import/export goods on a temporary basis, they should follow the procedures discussed below for declaration and tariff payment.

The procedures vary somewhat where the goods are not re-transported to their countries of origin.

Goods Subject to Temporary Exemptions

Where the following goods have been approved by Customs for temporary import/export, temporary exemptions may be granted if the tariff payers have, upon entry/exit of the goods, lodged with Customs a guaranty payment equivalent to the tariff otherwise payable on the goods, or some other form of guaranty, and if the goods are re-transported outside/into China within 6 months of the date of their entry/exit.

• Goods displayed or used in exhibitions, trade fairs, conferences, or other similar activities.
• Articles used for performances, or for competition in activities such as cultural or sports exchanges.
• Equipment, apparatus, or articles used in news reporting, or in the production of films or TV programs.
• Equipment, apparatus, or articles used in scientific research, teaching, or medical services.
• Means of conveyance or special vehicles used for any of the activities described above.
• Samples of goods.
• Equipment or tools used for installation, testing, or the inspection of facilities.
• Containers for goods.
• Goods used for non-commercial purposes.

Where the tariff payers need to extend the time limit for re-transportation, they may apply to Customs for an extension in accordance with rules laid out by the General Administration of Customs.

Goods Not Re-Transported

If, for any reason, the goods will not be re-transported outside/into China after the specified time limit, the tariff payers should settle the import/export declaration and tariff payment formalities with Customs, and make tariff payments before the time limit is reached.

Customs shall levy tariffs on the goods in accordance with the relevant rules.

Other Goods

Tariff Computation Rules

For other goods making a temporary entry/exit, Customs shall compute the dutiable price of the goods in accordance with the rules governing the determination of dutiable prices for imported/exported goods, and based on the tariff rates and exchange rates applicable on the date that Customs accepts the entry/exit of the goods.

Where the goods are re-transported outside/into China before the re-transportation deadline is reached, Customs may collect the tariff in installments on a monthly basis before the deadline, or in one lump sum when the goods are re-transported.

Tariffs Paid in Monthly Installments

The time limit of computing and levying the duty is 60 months.

In general, the tariff payable on a monthly basis is calculated using the following formula:

Tariff payable monthly = Total tariff payable × 60

Where the goods are re-transported more than 15 days but less than 1 month after they were released, the period used for computing the tariff payable on the goods shall be 1 month.

Where the goods are re-transported less than 15 days after they were released, no tariffs shall be levied.

Goods Not Re-Transported

If, for any reason, the goods will not be re-transported outside/into China after the specified term, the tariff payers should settle the import/export declaration and tariff payment formalities with Customs, and make tariff payments before the term expires.

Where the tariff payers fail to settle the import/export declaration or duty payment formalities with Customs before the term expires, Customs shall collect the tariffs payable.

Customs shall also charge interest on the tariff arrears that are due.

Goods Entering/Exiting for Repair

General Guidelines

Where goods are sent for repair, tariff payers should follow the procedures discussed below for declaration and tariff payment.

The discussion falls into two main categories.

• Goods imported for repair (i.e., goods exported from China that are subsequently imported back into China for repair). Rules governing their subsequent re-exit are covered.
• Goods exported for repair (i.e., goods imported into China that are subsequently exported back out of China for repair). Rules governing their subsequent re-entry are covered.

  Variations under the following circumstances are also discussed:

• Goods are not re-transported back to their countries of origin.
• Parts or raw materials are imported into China to effect the repair of the goods.

Imports for Repair

Where tariff payers import goods for repair, they should follow the procedures outlined below.

Declaration Procedures

Where tariff payers import goods for repair for a specified period, they should provide either of the following documents when declaring the goods to Customs. They should also lodge the import tariff guaranty with Customs.

• The repair contract.
• The original export contract containing the guaranty clause.

Otherwise, Customs shall administer the goods as bonded goods.

Tariff Computation Rules

Customs shall compute the dutiable price and tariff payable for goods that are imported for repair, in accordance with the rules governing the determination of dutiable prices for imported goods, and based on the tariff rates and exchange rates applicable on the date that Customs accepts the declaration for re-exit.

Re-Exit from China

The goods should be re-transported outside China after the specified period.

Imports of Raw Materials and Parts

Where the tariff payers need to import raw materials or parts to effect the repair of the goods in question, they should declare the raw materials or parts. At the time of declaration, they should provide the following documents to Customs. They should also lodge the import tariff guaranty with Customs.

• The repair contract, or the original export contract containing the guaranty clause.
• The import declaration form for the goods being imported for repair (except those declared together with the goods imported for repairs).

Otherwise, Customs shall administer the goods as bonded goods.

The raw materials or parts that are imported may be used only for the repair of the goods in question.

Exports of Leftover Raw Materials and Parts

After the repair is completed, any leftover raw materials or parts should be re-transported outside China, together with the goods that have been repaired.

At this time, the tariff payers should declare these leftover items to Customs, and provide the following documentation:

• The original declaration forms for the goods imported for repair, and the raw materials or parts.
• The repair contract, or the original export contract containing the guaranty clause.

On the basis of these documents, Customs shall handle the release formalities related to the guaranties lodged with Customs for the entry of the goods, and for the raw materials or parts.

Where the goods are administered as bonded goods, Customs shall handle the formalities in accordance with the rules governing bonded goods.

Goods Not Re-Transported Outside China

Where tariff payers are unable to re-transport the goods in question outside China within the time limit specified by Customs, but have justifiable reasons, they may explain to Customs, and apply for an extension before the time limit is exceeded.

Where tariff payers fail to re-transport the goods outside China within the time limit approved, Customs shall administer the goods in accordance with the rules governing standard import/export of goods.

It shall apply the guaranties lodged by the tariff payers on entry of the goods, towards settlement of the tariffs payable.

Exports for Repair

Where tariff payers export goods for repair, they should follow the procedures outline below:

Declaration Procedures

Where tariff payers export goods for repair for a specified period, they should provide either of the following documents when declaring the goods to Customs:

• The repair contract.
• The original import contract containing the guaranty clause.

Tariff Computation Rules

Customs shall compute the dutiable price and tariff payable for goods that are exported for repair, in accordance with the rules governing the determination of dutiable prices for imported/exported goods, and based on the tariff rates and exchange rates applicable on the date that Customs accepts the declaration for re-entry.

Re-Entry into China

The goods exported for repair should be re-transported into China within the time limit specified by Customs.

At the time of re-entry, the tariff payers should provide the following documents when declaring the goods:

• The original declaration form.
• The repair contract, or the original import contract containing the guaranty clause.
• The repair invoices.

Goods Not Re-Transported into China

Where tariff payers are unable to re-transport the goods in question back into China within the time limit specified by Customs, but have justifiable reasons, they may explain to Customs, and apply for an extension before the time limit is exceeded.

Where tariff payers fail to re-transport the goods back into China within the time limit approved, Customs shall administer the goods and levy tariffs in accordance with the rules governing standard import/export of goods.

Goods Exiting for Processing

General Guidelines

Where goods are sent for processing outside China, tariff payers should follow the procedures discussed below for declaration and tariff payment.

The procedures vary somewhat for goods that are not re-transported back into China.

Declaration Procedures

On Exit

Where tariff payers export goods for processing within a specified time limit, they should declare the goods to Customs, and provide the entrusted processing contract.

Where the goods are commodities that are subject to export tariffs, the tariff payers should also lodge the export tariff guaranty with Customs.

The goods should be transported back into China within the time limit specified by Customs.

On Re-Entry

When the goods are re-transported back into China, the tariff payers should provide the following documents to Customs:

• The original export declaration form.
• The entrusted processing contract.
• The processing invoices.

Tariff Computation Rules

Customs shall compute the dutiable price and tariff payable for the goods in accordance with the rules governing the determination of dutiable prices for imported/exported goods, and based on the tariff rates and exchange rates applicable on the date that Customs accepts the declaration of re-entry.

At the same time, Customs shall handle the formalities related to the release of the guaranty lodged by the tariff payers on exit of the goods.

Re-Entry into China

At the time of re-entry, Customs shall levy tariffs in accordance with the rules governing the standard import of goods.

Goods Not Re-Transported into China

Where tariff payers are unable to re-transport the goods in question back into China within the time limit specified by Customs, but have justifiable reasons, they may explain to Customs, and apply for an extension before the time limit is exceeded.

Where tariff payers fail to re-transport the goods back into China within the time limit approved, Customs shall administer the goods tariffs in accordance with the rules governing standard import/export of goods.

It shall apply the guaranties lodged by the tariff payers on exit of the goods, towards settlement of the tariffs payable.

Goods Returned

General Guidelines

Where goods are returned, tariff payers should follow the procedures discussed below for declaration and tariff payment.

There are two main categories.

• Exports returned (i.e., goods that are exported outside China and subsequently transported back into China).
• Imports returned (i.e., goods that are imported into China and subsequently transported back outside China).

Exports Returned

Declaration Procedures

Where goods exported outside China are returned and transported back into China under the following circumstances, the tariff payers should submit relevant documents and substantiating documents in accordance with the prevailing rules when making the import declaration for the goods:

• The goods are returned because they are of poor quality or fail to meet specifications.
• The goods are returned in the same state.
• The goods are returned within 1 year of the date that they were released.

Upon confirmation of the circumstances by Customs, import tariffs on the goods shall be waived on re-entry.

Imports Returned

Declaration Procedures

Where goods imported into China are returned and transported back outside China under the following circumstances, the tariff payers should submit relevant documents and substantiating documents according to the prevailing rules when making the export declaration for the goods:

• The goods are returned because they are of poor quality or fail to meet specifications.
• The goods are returned in the same state.
• The goods are returned within 1 year of the date that they were released.

Upon confirmation of the circumstances by Customs, export tariffs on the goods shall be waived on re-exit.

EXERCISE OF SPECIAL TARIFFS

Where goods exported to China are subject to dumping, subsidization, or increased importation, the Ministry of Commerce and relevant State Council organs have an obligation to investigate the cases, and determine if local industries are suffering as a result of the dumping, subsidization, or increased exportation.

The State Council has formulated comprehensive procedures governing the actions and counter-measures to be taken in each of these cases, to be discussed in detail later.

In general, the process involves four main stages.

• Registration of the case.
• A preliminary investigation, after which a primary judgement is announced, and interim counter-measures may be implemented.
• A further investigation, after which a final judgement is announced, and full counter-measures may be implemented.
• A review, after which the counter-measures may be retained, revised, or terminated.

Anti-Dumping Tariffs

General Guidelines

By definition, goods are “dumped” in a country when they are exported to that country at a price that is lower than the normal price that the goods would fetch in the course of normal trade. As a result, local industries may be damaged in various ways.

The State Council has formulated comprehensive procedures governing the actions to be taken when goods are dumped in China. These anti-dumping measures are discussed later.

Where any country or region takes discriminatory anti-dumping measures against products exported from China, corresponding measures may be implemented by China against that country or region, after considering the practicability of such measures under the prevailing circumstances.

Initiating Investigations

Under anti-dumping regulations promulgated by the State Council, any natural person, legal entity, or relevant organization that operates in or that represents a domestic industry, may by law apply to the Ministry of Commerce to initiate a formal anti-dumping investigation.

Within 60 days of receiving the written application and relevant evidence provided by the applicants, the Ministry shall assess whether the application should be lodged by an organization operating in the industry affected, or by an organization representing the industry affected; examine the contents of the application and the evidence attached; and determine whether or not to proceed with a formal investigation.

Under special circumstances, even if the Ministry has not received any written application to initiate an investigation, it may decide to register a case for investigation where it has sufficient evidence to prove the existence of dumping and the resultant damage to local industries from the dumping.

Primary Judgement

Based on the results of the investigation, the Ministry shall make primary judgements on the dumping, the damage to local industries, and the tenability of a causal relationship between the two, and shall make its pronouncements accordingly.

Where the primary judgement confirms the dumping, the damage and, the tenability of causality, the Ministry shall continue to investigate the dumping and its extent, and the damage and its extent. It shall then make final judgement based on the results of this further investigation and shall make its pronouncements accordingly.

Interim Measures While Investigations are Ongoing

Where the primary judgement confirms that the case against dumping is tenable and that the dumping damages local industries, provisional anti-dumping measures may be taken. Such measures include the levy of interim anti-dumping tariffs.

Where interim anti-dumping tariffs are imposed, the tariff levels should commensurate with the dumping levels that have been verified on a preliminary basis by the primary judgement.

The Ministry of Commerce shall initiate the process on whether to impose anti-dumping tariffs, the Tariff and Classification Committee of the State Council shall make the final decision, and the Ministry of Commerce shall then make the announcement. Customs shall execute the measures starting from the date of the announcement.

Time Limits

Where provisional anti-dumping measures are imposed, the period shall normally stretch for 4 months, starting from the date of the announcement to impose the measures. Under special circumstances, the period may be prolonged to 9 months.

For 60 days after the announcement that an anti-dumping investigation has been initiated, no provisional anti-dumping measures shall be taken.

Conciliatory Moves by Exporters

During the anti-dumping investigation, the exporters involved may pledge to the Ministry of Commerce to adjust the prices of the products, or to stop exporting the products at dumping prices.

Where the Ministry finds this price pledge to be plausible and that accepting the pledge serves public interests, it may suspend or terminate the anti-dumping investigation. It shall not levy anti-dumping tariffs or take other provisional anti-dumping measures.

Where the exporters break their price pledge, the Ministry may immediately resume the anti-dumping investigation. Based on the best information available, it may decide to implement provisional anti-dumping measures. It may retroactively pursue anti-dumping tariffs on products imported up to 90 days before the implementation of the provisional anti-dumping measures. Products imported before the price pledge is broken shall be excluded.

Final Judgement

Where the final judgement holds that the case against dumping is tenable and that the dumping damages local industries, anti-dumping tariffs may be levied. The imposition of these tariffs should serve public interests.

The Ministry of Commerce shall initiate the decision process on whether to impose interim anti-dumping tariffs, the Tariff and Classification Committee of the State Council shall make the final decision, and the Ministry of Commerce shall then make the final announcement. Customs shall execute the measures starting from the date of the announcement.

New Exporters

Even if anti-dumping tariffs have been levied on certain products, where new exporters export these products to China but did not so during the anti-dumping investigation, and where they can prove that they have no connection with the exporters whose products are subject to the anti-dumping tariffs, the new exporters may apply to the Ministry of Commerce for separate determination of the dumping level.

The Ministry shall quickly examine the merits of the case and deliver the final judgement. During the examination, no anti-dumping duty shall be levied on the products exported to China by the new exporters.

Imposition of Tariffs

Scope

Anti-dumping tariffs shall be applied to products imported after the date that the final judgement is announced, except where otherwise stipulated.

The tariff payers shall be the businessmen that import the products into China. Tariff levels shall be commensurate with the dumping levels.

Where the tariffs need to be levied on the products of exporters that are beyond the scope of the original investigation, the tariffs shall be determined in line with fair form.

Tariff levels shall not exceed the dumping levels determined in the final judgement.

Time Limits

In general, anti-dumping tariffs may be levied up to a maximum of 5 years.

However, the period may be appropriately extended if termination of the levy might lead to continued dumping and damage, or the recurrence of dumping and damage.

Retroactive Imposition

Where the final judgement upholds the existence of material damage, and where provisional anti-dumping measures have been implemented before this stage, the anti-dumping tariffs may be pursued retroactively, to the period when the provisional measures were implemented.

Where the final judgement upholds the existence of the threat of material damage, and where provisional anti-dumping measures have already been implemented, based on the argument that non-implementation would only delay judgements regarding material damage, the anti-dumping tariffs may be pursued retroactively, to the period when the provisional measures were implemented.

Anti-dumping tariffs may be retroactively pursued and imposed on products imported up to 90 days before provisional anti-dumping measures are implemented, where both of the following circumstances apply. Products imported before the investigation shall be excluded.

• The products have a history of damaging local industries, or the importing businessmen know or should know the exporters are dumping the products, and that this dumping will damage local industries.
• Large quantities of the products are imported over a very short period, and may seriously counteract the remedial effect of the anti-dumping tariffs.

Tariff Collection and Rebates

Where Final Tariffs Do Not Match Interim Tariffs

Where the anti-dumping tariffs determined in the final judgement exceed the interim anti-dumping tariffs paid or payable, or exceed the value of the goods, as estimated for guaranty purposes, the portion undercollected shall be given up.

Where the anti-dumping tariffs determined in the final judgement are lower than the interim anti-dumping tariffs paid or payable, or lower than the value of the goods, as estimated for guaranty purposes, either the portion overcollected shall be rebated to the tariff payers, based on practicability, or the tariff shall be recomputed.

Where Final Judgement Rules Against Imposition

Where the final judgement determines that no anti-dumping tariffs shall be levied, or where the final judgement does not uphold the retroactive pursuit of anti-dumping tariffs, the interim anti-dumping tariffs already collected shall be rebated to the tariff payers.

Where Tariffs Do Not Match Dumping Levels

Where the importers of the products can prove that the anti-dumping tariffs they have paid exceed the dumping levels, they may apply to the Ministry of Commerce for rebates. After the Ministry has examined the applications and investigated the claims, the Ministry may suggest to the Tariff and Classification Committee of the State Council that a rebate is in order. If the Committee accepts the suggestion, it may decide to allow a rebate. Customs shall then issue the rebate.

Review

After examining the effectiveness of the anti-dumping tariffs, the Ministry of Commerce may decide to review the necessity of continuing to levy the tariffs for reasonable argument.

It may also, after a fair length of time, decide to review the necessity of continuing to levy the tariffs at the request of the interested parties, after examining the evidence provided by the interested parties.

Based on the results of the review, the Ministry shall put forward suggestions as to whether to retain, revise, or terminate the anti-dumping tariffs. The Tariff and Classification Committee of the State Council shall make its decision based on the Ministry's suggestions. The final decision shall be announced by the Ministry.

The review period shall not exceed 12 months, starting from the date that the Ministry decides to conduct the review. The review process shall not be allowed to impede the implementation of the anti-dumping measures.

Anti-Subsidy Tariffs

General Guidelines

By definition, goods exported by a country or region are “subsidized” when the government or a public agency of that country or region promotes the export of the goods by providing the exporters with benefits, whether direct or indirect, that allow the goods to be exported at lower-than-normal costs. Indirect subsidization can take the form of preferential financing, tax benefits, or promotional activities.

The State Council has formulated comprehensive procedures governing the actions to be taken when goods exported to China are subsidized. These anti-subsidy measures are discussed in detail later.

Where any country or region takes discriminatory anti-subsidy measures against products exported from China, China may implement corresponding measures against that country or region, after considering the practicability of such measures under the prevailing circumstances.

Initiating Investigations

Under anti-dumping regulations promulgated by the State Council, any natural person, legal entity, or relevant organization that operates in or that represents a domestic industry, may apply to the Ministry of Commerce to initiate a formal anti-dumping investigation.

Within 60 days of receiving the written application and relevant evidence provided by the applicants, the Ministry shall assess whether the application should be lodged by an organization operating in the industry involved, or by an organization representing the industry involved; examine the contents of the application and the evidence attached; and determine whether or not to proceed with a formal investigation.

Under special circumstances, even if the Ministry has not received any written application to initiate an investigation, it may decide to register a case for investigation where it has sufficient evidence to prove the existence of subsidization and resultant damage to local industries from the subsidization.

Primary Judgement

Based on the results of the investigation, the Ministry shall make primary judgements on the subsidization, the damage to local industries and the tenability of a causal relationship between the two, and shall make its pronouncements accordingly.

Where the primary judgement confirms the subsidization, the damage and the tenability of causality, the Ministry shall continue to investigate the subsidization and its extent, and the damage and its extent. It shall then make final judgement based on the results of this further investigation and shall make its pronouncement accordingly.

Interim Measures while Investigations are Ongoing

Where the primary judgement confirms that the case against subsidization is tenable and that the subsidization damages local industries, provisional anti-subsidy measures may be taken.

The measures shall take the form of levying anti-subsidy tariffs through collecting cash guarantees or through guaranty documents.

The Ministry of Commerce shall initiate the decision process on whether to impose the interim anti-subsidy tariffs, the Tariff and Classification Committee of the State Council shall make the final decision, and the Ministry of Commerce shall then make the announcement. Customs shall execute the measures starting from the date of the announcement.

Time Limits

Where provisional anti-subsidy measures are imposed, the period shall normally stretch for 4 months, starting from the date of the announcement to impose the measures. Under special circumstances, the period may be prolonged to 9 months.

For 60 days after the announcement that an anti-subsidy investigation has been initiated, no provisional anti-subsidy measures shall be taken.

Conciliatory Moves by Exporters/Exporting Countries

During the anti-subsidy investigation, the government of the exporting country may propose to cancel or restrict the subsidy, or other relevant measures, or the exporters may pledge to adjust the prices of the products. The Ministry of Commerce should give due consideration to such proposals.

Where the Ministry finds the price pledge to be plausible and that accepting the pledge serves public interests, it may suspend or terminate the anti-subsidy investigation. It shall not levy anti-subsidy tariffs or take other provisional anti-subsidy measures.

Where the exporters break their price pledge, the Ministry may immediately resume the anti-subsidy investigation. Based on the best information available, it may decide to implement provisional anti-subsidy measures. It may retroactively pursue anti-subsidy tariffs on products imported up to 90 days before the implementation of the interim anti-dumping measures. Products imported before the price pledge is broken shall be excluded.

Final Judgement

Where the final judgement holds that the case against subsidization is tenable and that the subsidization damages local industries, anti-subsidy tariffs may be levied. The imposition of these tariffs should serve public interests.

The Ministry of Commerce shall initiate the process on whether to impose anti-dumping tariffs, the Tariff and Classification Committee of the State Council shall make the final decision, and the Ministry of Commerce shall then make the announcement. Customs shall execute the measures starting from the date of the announcement.

Imposition of Tariffs

Scope

Anti-subsidy tariffs shall be applied to products imported after the date that the final judgement is announced, except where otherwise stipulated.

The tariff payers shall be the importers of the subsidized products. Tariff levels shall commensurate with the subsidy levels.

Where the tariffs need to be levied on the products of exporters that are beyond the scope of the original investigation, the tariffs shall be determined in line with fair form.

Tariff levels shall not exceed the subsidy levels determined in the final judgement.

Time Limits

In general, anti-subsidy tariffs may be levied up to a maximum of 5 years.

However, the period may be appropriately extended where a later review of the case determines that termination of the levy might lead to continued subsidization and damage, or the recurrence of subsidization and damage.

Retroactive Imposition

Where the final judgement upholds the existence of material damage, and where provisional anti-subsidy measures have been implemented before this stage, the anti-subsidy tariffs may be pursued retroactively, to the period when the provisional measures were implemented.

Where the final judgement upholds the existence of the threat of material damage, and where interim anti-dumping measures have already been implemented, based on the argument that non-implementation would only delay judgements regarding material damage, the anti-subsidy tariffs may be pursued retroactively, to the period when the provisional measures were implemented.

Anti-subsidy tariffs may be retroactively pursued and imposed on products imported up to 90 days before provisional anti-subsidy measures are implemented, where all of the following circumstances apply:

• Large quantities of the products are imported over a very short period.
• The increased imports may seriously counteract the remedial effect of the anti-subsidy tariffs.
• This kind of product is benefiting from the subsidy.

Tariff Collection and Rebates

Where Final Tariffs Do Not Match Interim Tariffs

Where the anti-subsidy tariffs determined in the final judgement exceed the cash guaranty provided, or the value guaranteed in the guaranty document provided, the portion under-collected shall be given up.

Where the anti-subsidy tariffs determined in the final judgement are lower than the cash guaranty or the value guaranteed in the guaranty document, the portion overcollected shall be rebated to the tariff payers.

Where Final Judgement Rules Against Imposition

Where the final judgement determines that no anti-subsidy tariffs shall be levied, or where the final judgement does not uphold the retroactive pursuit of anti-subsidy tariffs, the cash guaranty already collected shall be rebated and the guaranty document cancelled.

Review

After examining the effectiveness of the anti-subsidy tariffs, the Ministry of Commerce may, under the condition of fair argument, decide to review the necessity of continuing to levy the tariffs for reasonable argument.

It may also, after a fair length of time, decide to review the necessity of continuing to levy the tariffs at the request of the interested parties, after examining the evidence provided by the interested parties.

Based on the results of the review, the Ministry shall put forward suggestions as to whether to retain, revise, or terminate the anti-subsidy tariffs. The Tariff and Classification Committee of the State Council shall make its decision based on the Ministry's suggestions. The final decision shall be announced by the Ministry.

The review period shall not exceed 12 months, starting from the date that the Ministry decides to conduct the review. The review process shall not be allowed to impede the implementation of the anti-subsidy measures.

Guaranty Measure Tariffs

General Guidelines

Under fair trade conditions, the existence of a promise by a country or region exporting a particular product to reduce export tariffs on that product may lead to the increased importation of that product by a member nation of the World Trade Organization (WTO). This increase might result in serious damage or the threat of serious damage to domestic industries that produce the same type of product or a directly competitive product in the WTO member nation.

Under these circumstances, the member nation may implement counter-measures, by restricting the importation quantity of the product and/or raising import tariff rates on the product, to allow the domestic industries affected to adapt to the competition. Such countermeasures are known as guaranty measures.

The State Council has formulated comprehensive procedures governing the actions to be taken in such cases. Where increased importation of a particular product might result in serious damage or the threat of serious damage (hereafter referred to as damage, except where otherwise indicated) to domestic industries that produce the same type of product or a directly competitive product, investigations may be conducted, and guaranty measures implemented.

Where any country or region takes discriminatory guaranty measures against products exported from China, China may implement corresponding measures against that country or region, after considering the practicability of such measures under the prevailing circumstances.

Initiating Investigations

Under regulations on guaranty measures promulgated by the State Council, any natural person, legal entity, or organization relevant to the domestic industry affected may apply to the Ministry of Commerce to request the adoption of guaranty measures. The Ministry shall examine the application and decide, in a timely fashion, whether or not to register the case for investigation.

Even if the Ministry has not received any written application to initiate an investigation, it may decide to register a case for investigation where it has sufficient evidence to prove that increased importation has damaged domestic industries.

Based on the results of the investigation, the Ministry shall make a primary judgement or proceed directly to the final judgment, and make the corresponding announcement.

Primary Judgement

Where the primary judgement confirms increased importation, damage to local industries, and the tenability of a causal relationship between the two, the Ministry shall continue to investigate the subsidy and its range, and the damage and its extent. It shall then make final judgement based on the results of this further investigation, and shall make its pronouncement accordingly.

Where the primary judgement confirms that the case against the subsidy is tenable and that the subsidy damages local industries, interim anti-subsidy measures may be taken.

The measures shall take the form of levying anti-subsidy tariffs through collecting cash guarantees or through guaranty documents.

The Ministry of Commerce shall initiate the decision process on whether to impose interim guaranty measures, the Tariff and Classification Committee of the State Council shall make the final decision, and the Ministry of Commerce shall then make the announcement. Customs shall execute the measures starting from the date of the announcement.

Time Limits

Where interim guaranty measures are imposed, the period shall normally stretch for 200 days, starting from the date that the implementation of the interim measures is announced.

Emergency Measures

In urgent cases, where explicit evidence shows that increased importation will result in irreversible damage to the local industries affected if interim guaranty measures are not implemented, primary judgment may be made, and interim measures implemented. The measures may take the form of raising tariff rates.

Final Judgement

Where the final judgement confirms that increased importation of a particular product damages the domestic industries affected, guaranty measures may be implemented. They may take the form of increases in the tariff rates imposed on the products, or restrictions on the quantities imported. The imposition of these measures should serve public interest.

The Ministry of Commerce shall initiate the decision process on whether to raise tariff rates, the Tariff and Classification Committee of the State Council shall make the final decision, and the Ministry of Commerce shall then make the announcement. Customs shall execute the measures starting from the date of the announcement.

Where the final judgment determines that no guaranty measures shall be taken, any interim tariffs collected shall be rebated.

Imposition of Counter-Measures

Time Limits on Counter-Measures

In general, guaranty measures may be executed over a maximum of 4 years.

However, the period may be appropriately extended under the following conditions:

• That the measures, determined in line with procedures stipulated by the regulations governing guaranty measures, are necessary to prevent or remedy serious damage.
• That there is evidence proving that the domestic industries affected are adjusting.
• That the obligations of outward notice and negotiation have been met.
• That the measures imposed after the extension is granted are not harsher than those imposed previously.

For each guaranty measure imposed, the execution period and the extension period should not exceed 10 years.

Review and Adjustment

To ensure fair and effective implementation, adjustments or reviews shall be undertaken at fairly regular periods.

Where Period Exceeds 1 Year

Where the execution period exceeds 1 year, the measures should be gradually eased, at fixed intervals, during the period.

Where Period Exceeds 3 Years

Where the execution period exceeds 3 years, the Ministry of Commerce should review the measures halfway through the period.

The review shall study the impact of the measures on the domestic industries affected, and the degree to which these industries have adjusted to the competition.

Increased Rates

Where the guaranty measures take the form of tariff rate increases, the Ministry of Commerce shall put forward suggestions, based on the results of its reviews, as to whether to maintain or cancel the measures, or accelerate the easing of the measures, in accordance with prevailing regulations. The Tariff and Classification Committee of the State Council shall make its final decision based upon these suggestions, after which the decision shall be announced by the Ministry.

Re-Imposition of Counter-Measures

Where a guaranty measure is implemented again against the same imported product, the interval since the last execution of the measure should be at least 2 years, and should not be shorter than the execution period specified for the last execution of the measure.

An exception may be allowed where either of the following conditions applies, whereby a guaranty measure may be imposed on a product for an execution period of less than 180 days:

• At least 1 year has passed since the last guaranty measure was imposed against the imported product.
• Guaranty measures are not imposed again on the same product within 5 years of the date that the first guaranty measure was imposed.

Import Duties on Incoming Articles

General Guidelines

At the stage when incoming articles are imported into China, Customs tariffs, Value-Added Tax and Consumption Tax shall be integrated into a single import duty that is collected by Customs by law.

Tax Treatment

Which tax treatment shall apply to incoming articles for personal use depends on the quantity being imported.

• Within specified limits: Where the quantity is within the limits specified by the General Administration of Customs, the articles shall be exempt from import duty.
• Within reasonable limits: Where the quantity exceeds the limits specified by the General Administration of Customs, but where the amount is still reasonable, the duty payers shall be liable to pay import duty, in accordance with the prevailing rules, before the articles are released.
• Beyond reasonable limits: Where the quantity exceeds reasonable amounts, the articles shall be taxed in accordance with the relevant rules governing imported goods.

Where incoming articles are subject to the levy of tariffs as goods as specified by the Tariff and Classification Committee of the State Council, Customs tariffs shall be levied in accordance with the relevant provisions of the prevailing import and export regulations.

Scope

Duty Payers

Duty payers include the following entities:

• Individuals bringing the articles into China.
• Recipients of incoming articles sent by mail.
• Recipients importing the articles by other means.

Entrusted Agents

Duty payers may complete the duty payment formalities by themselves, or they may entrust others to complete the formalities.

The agents entrusted shall abide by the import and export regulations that are binding on the duty payers.

Tariff Rates

Customs shall classify the incoming articles, and determine the dutiable prices and the applicable tariff rates, in accordance with the specifications provided in the following tables formulated by the General Administration of Customs:

• Table of Import Duty Tariff Rates on Incoming Articles.
• Classification Table of the People's Republic of China on Incoming Articles.
• Dutiable Price Table of Incoming Articles of the People's Republic of China.

At present, three flat rates are charged for the following items:

• 50%: Tobacco; alcohol.
• 20%: Cotton, hemp skin; textiles, leather and the finished products thereof; TV receivers; refrigerators; washing machines; receiving/recording/playing machines; machines with receiving/recording/playing functions; video cameras; air-conditioning equipment; data auto-processing equipment; camera equipment; portable copying machines; slide projectors, picture projectors; bicycles; watches, clocks; parts and accessories used into the articles listed above; cosmetics.
• 10%: Books, newspapers, magazines, and other printed materials; films, slide shows, original tapes, and video tapes intended exclusively for education; gold, silver, jewelry, and their products thereof; foodstuff, beverages; tonics; seeds of plants; medical and health equipment; measuring and surveying apparatus and meters; medicines, materials used in medicines; typewriters; sports articles; kitchen and toilet articles; rubber and plastic products; tools; cultural articles; musical instruments; shoes, boots; furniture; miscellaneous articles; postal stamps; other articles (e.g., flowers, bags, toys, vacuum cleaners, telephones, washing detergents, works of art).

Computing Duty Payable

Duty payable is computed and levied on an ad valorem basis.

In general, the following formula is used to compute the duty payable:

Duty payable = Quantity × Dutiable price = Applicable tariff rate

Example

An individual brings a video camera with him into China after traveling abroad. The dutiable price is 8,000 yuan. The applicable tariff rate is 20%.

Duty payable = 8,000 yuan × 20% = 1,600 yuan

Reductions, Exemptions, Rebates, Collection

Reductions, exemptions, collection in cases of underpayment, the pursuit of collection, rebates, and levies on articles provisionally allowed into China shall follow the relevant rules laid out in the import and export regulations governing the levying of import and export tariffs on goods.

For the luggage of incoming travelers and incoming postal articles, the main exemptions from import duty are discussed below.

Articles Brought in by Specified Categories of Travelers

The following categories of travelers may enjoy certain exemptions:

• Individuals who have residential status in China but who work in diplomatic organizations outside China.
• Students studying abroad.
• Visiting scholars.
• Workers posted abroad.
• People for assistance to foreign countries.
• Oceangoing seamen.
• Overseas Chinese, and compatriots in Hong Kong, Macao, and Taiwan.
• Individuals working in foreign embassies, consulates, or relevant international organizations in China.

For example, where China residents working in diplomatic organizations abroad, students studying abroad, visiting scholars, workers for labor exportation, and people for assistance to foreign countries stay abroad for 180 consecutive days, they may, when they return to China, bring with them one article duty-free if the article is for daily living purposes and falls within the prescribed scope. Examples include the following items:

• TV sets.
• Washing machines, refrigerators.
• Cameras.
• Video players, receiving/recording players.
• Sophisticated audio/video equipment.

Oceangoing seamen may enjoy the same treatment if their duration abroad is 120 days.

Pharmaceutical Items

Contraceptives or medicines for personal use that do not exceed the quantities specified by Customs may be exempt from import duty.

Articles Brought in by Foreign Representatives on First Entry

Where foreign representatives are resident in China for more than 1 year (i.e., their work/student visas are valid for at least 1 year), where they bring into China the following articles for family use during the period that their visas are valid, and where the articles are being brought into China for the first time, the articles may be exempt from import duty, upon approval by Customs. The limit is one piece per category.

• Video cameras, cameras.
• Portable receiving/recording players.
• Laser CD players.
• Computers.

Some examples of foreign representatives in China are provided below:

• Representatives at the representative offices of foreign enterprises, or other economic, trade, or cultural organizations.
• Representatives at the representative offices of foreign, civil, economic, trade, or cultural organizations.
• Resident journalists at foreign press offices in China.
• Foreigners employed by Sino-foreign joint ventures, Sino-foreign cooperative enterprises, and foreign enterprises.
• Experts of foreign nationalities and overseas Chinese experts coming to work long term in China.
• Foreign students and overseas Chinese students studying long term in China.

Articles Brought in by Foreign Experts

In addition, where foreign experts bring the following articles for self-use into China, and where the amounts are reasonable, the articles may be exempt from duty:

• Books.
• Science and research instruments.
• Tools.
• Samples.
• Reagents.
• Other articles for teaching and research.