• Service: Tax, Global Indirect Tax, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 8/2/2013

China - Preferential treatment of imports in bonded zones 

August 2:  China’s General Administration of Customs issued guidance clarifying the requirements and procedures for grants of preferential treatment of goods imported through special customs supervision areas and bonded supervision entities (i.e., “bonded zones”).

This new regulation—Notice No. 36 [2013] (8 July 2013)—applies to products deemed to qualify for preferential tariffs, either under a free trade agreement or in accordance with special preferential duty rates for “least developed countries,” as evidenced by a valid certificate of origin or origin declaration and that are first entered and stored in bonded zones.

Prior to the July 2013 regulation, there was uncertainty regarding China Customs’ treatment of free trade agreement (FTA) qualifying goods that passed through bonded zones.

For instance, if FTA qualifying products were directly imported under general trading arrangements without passing through bonded zones, the preferential tariff would be readily granted as long as everything was in order.

However, if the goods first passed through a bonded zone, China Customs tended to be hesitant in allowing a preferential rate when the goods were subsequently cleared for domestic sales. This was partly due to the lack of clear guidelines with respect to Customs’ monitoring of the condition of the goods stored in bonded zones (and their pertinent documents) to prevent breach of the FTA rules.

Read an August 2013 report [PDF 399 KB] prepared by the KPMG member firm in China: Harmonising China Free Trade Agreements with bonded zones

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