China: Maritime Legal Update – February 2014

Last Updated: 23 May 2014
Article by Shanghai Kai-Rong Law Firm

1. The Ministry of Transport issued the Regulation on the Administration of Domestic Water Transport

The Regulation on the Administration of Domestic Water Transport issued on December 30, 2013 ("the Regulation") will come into force from March 1, 2014. It is stipulated in the Regulation as follows:

Water transport operator shall be equipped with professional shipping and engine managers, offenders will be fined 10, 000 to 30, 000 yuan.

An individual person shall only be entitled to apply for common inland river transport operating; such applicants shall be qualified to be registered in ministry of industry and commerce; the self-owned shipping capacity shall not excess 600MTs in gross, and be capable of safety management including safety supervision, emergency handling, post safety operation procedures, etc.

The water transport operators are prohibited from letting or lending their operating license, or illegally transferring their qualifications.

Waterway passenger transportation business operators shall sell passenger tickets as per published fare, and are prohibited from obtain illegitimate benefits by unreasonable ways, such as conditional sale, cash back, and others in disguised forms.


2. The Circular from the Ministry of Transport Concerning the Issuance of the Rules on the Berthing Capacity of Coastal Ports

On January 26, 2014, Ministry of Transport issued the Rules on the Berthing Capacity of Coastal Ports ("the Rules"), which will come into force from July 1, 2014. The main object applicable in the Rules is coastal ports, and it is stipulated that the lighterage berth shall only be available for the vessels not more than 250, 000MTs non-bulk liquid cargo. Its overall principal is that cargo ship must berth as per its berth classification, so as to ensure safety. The rule will mainly play part in following:

Firstly, the "one ship, one case" basis is to be abolished, to ensure safety and avoid randomly berthing.

Secondly, the Rules aims to exert berth's potential, help to solve difficulties of enterprise. At current, shipping markets stay in low level, ports berths structures are not reasonable, the Rules permit to hike one or two lighterage berth classification provided safety guaranteed to meet port production requests.

Thirdly, the Rules is to secure the assessment and reinforcement jobs to berths, strengthen post supervisions.


3. The Announcement from the Ministry of Transport on the Trial Implementing Measures for Increasing the Proportion of Foreign Investment in International Shipping and International Ship Management in the China (Shanghai) Pilot Free Trade Zone

On January 27, 2014, the Ministry of Transport issued Announcement on the Trial Implementing Measures for Increasing the Proportion of Foreign Investment in International Shipping and International Ship Management in the China (Shanghai) Pilot Free Trade Zone, which stipulates as follows, After being permitted by the competent authorities of the Ministry of Transport, Chineseforeign contractual joint ventures and Chinese-foreign joint ventures, with foreign investment capital more than 49%, and those enterprise own or actual own ships, may engage in inbound and outbound shipping transport business; after being permitted by the competent authorities of Shanghai Ministry of Transport, wholly foreign-owned enterprises in the free trade zone may run service of international ship management; for international shipping transport enterprises of Chinese-foreign contractual joint ventures and joint ventures established in free trade zone, their chairman and general manager will be decided by negotiation of Chinese and foreign parties, and, their own or bareboat chartered ships may be registered according to China (Shanghai) Free Trade Zone International Ship Registration System.


4. Chinese Authorities Clarify the Taxation Policy for Imports of Vessels

On January 28, 2014, the Ministry of Finance ("MOF") and State Administration of Taxation ("SAT") jointly released the Circular on Clarifying the Issues concerning the Taxation Policy for Imports of Vessels (the "Circular").

The Circular clarifies that the import bonded policy designed for customs special supervision areas such as bonded port areas does not apply to inbound vessels that cannot enter the said areas, and, for imports of such vessels, the customs clearance procedures shall be handled according to the rules governing imported goods, the existing taxation policy on imports of vessels shall be implemented, and the import duty and import VAT shall be paid as required.


5. The Circular on Clarifying Issues concerning the Taxation Policy for Imports of Vessels Issued on January 28, 2014

General Administration of Customs of the People's Republic of China:

To maintain the authority and seriousness of tax policy, enhance policy consistency between shipping and ship industries, some relevant ship import tax policies are announced as below.

Tax policy for special supervised area by customs (such as bonded port area) shall not be applicable for those inbound ships which cannot actually enter the area. Unless qualified for Chinese-funded convenient flag vessel who back to china for registration, all the other entering vessels in customs special supervised area must go through custom declaration formality as per relevant ship entering tax rules, pay tariffs and import VAT.


6. The State Administration of Taxation announced the list of administrative examination and approval items

On February 13, 2014, the State Administration of Taxation ("SAT") released the Announcement on the Release of Administrative Examination and Approval Items (the "Announcement"), with effect from the date of issuance.

The Announcement covers 87 tax-related administrative examination and approval items, including seven administrative licensing approval items and 80 non-administrative licensing approval ones and such fields as day-to-day taxation management, foreign-related taxation management, tax reduction and exemption management, and management of tax accounting firms.


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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