Having a system for voluntary disclosure of customs
non-compliance that rewards those who use them by providing reduced
penalties is part of many western customs processes.
Last year the General Administration of Customs (GAC) of the
People's Republic of China established a research team to study
the feasibility of introducing a customs voluntary disclosure
programme, and the current pilot is one trial resulting from this
Since July this year, the GAC has progressively been
implementing a pilot "Enterprise Self-discipline"
programme at selected regional/port customs offices. The
programme is a direct result of the study and is similar to the
voluntary disclosure programmes available in various other
developed countries. It provides for more lenient treatment by
customs for voluntarily reported non-compliance activities.
Currently this programme is available at customs offices in
Tianjin, Wuhan, Nanjing, Suzhou, Xiamen, and Shanghai Pilot
What You Can Do to Benefit from this Opportunity
You can take the following steps in order to benefit:
Conduct your own internal compliance review to identify any
non-compliance trade issues.
Investigate the reasons for the non-compliance and estimate the
value of the potential exposure.
Compile documentation to support your case and submit a
voluntarily report of the non-compliance to customs via a
Customs will verify your self-audit report and may decide to
randomly select items to test the accuracy of your voluntary
Scope of Voluntary Disclosure
The scope of your voluntary disclosure should include:
Any customs non-compliance issues in daily import/export
Any customs non-compliance issues, during the process of a
customs audit, beyond the listed scope of the audit
Some customs offices have listed certain out-of-scope scenarios,
such as in the case where a Customs Price Enquiry Letter has been
Lenient treatment may include:
Lenient, mitigated or no administrative penalties;
Reduced or exempted late-payment surcharge for duty/VAT
Flexible treatment when considering possible downgrading of an
entities customs compliance rating;
Exemption of formal customs audit this/next year.
We suggest you take this opportunity to:
Identify your key customs risk areas, such as tariff
classification, valuation, origin, processing trade, bonded
storage, duty exempted equipment, etc.;
Conduct the self-review, quantify exposures and assess the
level of intent;
Formulate a strategy of immediate mitigation actions, voluntary
disclosure, and further correction plans.
Although some customs offices announced that the current pilot
programme is only valid till end of this year, we believe that this
pilot will lead to changes in legislation that will formalise the
programme. It has also been proposed within customs to add
voluntary disclosure when revising the Regulation on Customs Audit.
We expect that a formal regulation on voluntary disclosure will be
put on the GAC agenda sooner rather than later.
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This article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
discussed herein. Please also read the JSM legal publications
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The rapid growth of global economy has led to widespread international trade and this expansion in international trade has brought with it increasing possibilities of cross border insolvency proceedings.
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