Global

Details

  • Service: Tax, Global Indirect Tax
  • Type: Business and industry issue
  • Date: 8/1/2012

China customs implement an advance valuation review system for imported goods 

China customs

On 29 November 2011 the General Administration of Customs announced that all Chinese customs houses must implement by 1 January 2012 an Advance Valuation Review system for imported goods.

Under an AVR, a company applies to the customs authority in the destination port of its imported goods for a review of the dutiable value of such goods, before they are declared at customs for import.

  • Enterprises that have a Class A or AA status may apply for an AVR. Customs departments in various districts may set out qualifying conditions.
  • The commodities listed in the scope of AVR are mainly those that are difficult for customs to assess and determine the value of on-site. Each customs office directly under the GAC may set out the scope or conditions of the commodities applicable for AVR.
  • The AVR does not apply to imported goods that are valued using a particular formula. Customs in various districts have the discretion to decide whether or not to bring bonded goods sold domestically under the scope of an AVR.
  • An application for an AVR should be submitted at least 15 days prior to the goods arrival. Once the AVR decision is made, it remains valid for 90 days, and only for the goods under application. In special circumstances it may be extended for 30 days with the consent of customs.
  • The tariff departments of the various customs authorities directly under the GAC (including the commodity price information agencies established by the GAC) will be in charge of the AVR in their respective customs district.

Although Circular 419 has clarified many issues, there are a number of matters regarding the practical operation to be further specified, for example:

  • the AVR is not specified for imported goods involving royalty payment or related-party transactions
  • the application processing time by customs is not specified
  • an AVR decision issued by customs is generally valid only in its customs district. The issue of how to apply such a unified decision across different customs districts is not clarified.

Conclusion

The customs valuation is a very technical process which may require business:

  • to conduct a desktop analysis of their customs valuation risk, and the feasibility for applying for an AVR review
  • to communicate with the relevant customs house and obtain opinions on the customs valuation issues
  • to submit the required documents and process the necessary formalities for an AVR, price registration or valuation with a certain formula.
 

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