April 1 2011

Revised procedures for processing trade goods

Baker McKenzie | International Trade - China

Eugene Lim


On November 1 2010 the General Administration of Customs issued a public announcement on its Decision to Revise the PRC Customs Processing Trade Goods Supervision and Administrative Procedures (II)(Order 195).

The procedures were originally issued on February 26 2004 and came into effect on April 1 2004. Order 195 alters the original procedures to adapt to changes in the processing trade and to increase standardisation in the industry. The latest revisions, which came into effect on December 5 2010, provide as follows:

  • Processing trade goods may not be mortgaged without customs authorisation.
  • Enterprises must separately manage and store processing trade goods at specific locations registered with Customs and may not change the location without customs approval.
  • Operating enterprises seeking to use outsourced processing must provide Customs with a cash deposit or bank guarantee in an amount equivalent to the customs and value-added tax payment otherwise payable in relation to the goods involved if:
    • the outsourced processing crosses customs locations (eg, the outsourced processor is in a locality under the jurisdiction of a different customs house from the processing trade enterprise);
    • the outsourced processor performs the entire work process;
    • the outsourced processing goods are not directly returned to the processing trade entity, but are exported; and
    • the operating enterprise or the outsourced processor is subject to an ongoing investigation on suspicion of smuggling or violating regulations, but the processing trade goods are not subject to the investigation.
  • Processing trade goods must be used exclusively for processing trade activities.
  • Bonded and non-bonded materials may be interchanged only:
    • in urgent circumstances with prior customs authorisation;
    • where such interchange is limited to the same enterprise, the same types of good with the same specifications and in the same quantities; and
    • where goods are not interchanged for profit-making reasons.(1)

For further information on this topic please contact Eugene Lim at Baker & McKenzie's Hong Kong office by telephone (+852 2846 2413), fax (+852 2845 0476) or email ([email protected]).

Endnotes

(1) These three conditions do not apply to bonded materials imported for toll manufacturing.