China: Nationwide Customs Clearance Integration Reform

Last Updated: 21 December 2017
Article by Andrew Zhang

June 28, 2017, the General Administration of Customs of China published an announcement on the Nationwide Customs Clearance Integration reform starting July 1, 2017. This reform is an important step forward from the previous Regional Customs Clearance Integration Reform.

After such reform is fully implemented, it is expected to unify the customs' enforcement relating to declaration matters nationwide, such as the classification and valuation of the imported good, which would eliminate a traditional compliance challenge as the result of the former customs district clearance system.

Since this reform is influencing the customs clearance process that actually takes place day to day, especially for the companies importing goods from foreign countries, we then advise companies to pay attention to the new customs policy in China.

Now, we will have a quick glance at this new customs clearance system with some key words as follows:

1.Two Center, Two function

On July 1, 2017, the General Administration of Customs of China established three Tax Collection and Administration Centers ("TCAC"). These TCACs are located in four cities; which are Shanghai, Guangzhou, Beijing and Tianjin.

The TCACs are responsible for tax collection and administration matters through reviewing and inspecting the declaration of the companies.

At the same time, the General Administration of Customs of China established three Risk Prevention and Control Centers ("RPCC"). The RPCCs are situated in three cities; Shanghai, Qingdao, and Guangzhou (Huangpu). The RPCCs are responsible for analyzing the administration risks and instructing the local customs to make on-site inspection.

2.Different goods, Different Centers

Different TCACs are responsible for the tax collection and administration matters of different goods.

The TCAC in Shanghai is in charge of the imported mechanical and electrical products (the chapters 84-87 and 89-92 in HS CODE), the TCAC in Guangzhou is in charge of the imported chemical products, minerals products and metal products (the chapters 25-29, 31-40, 68-83 in HS CODE), and the TCAC in Beijing and Tianjin is in charge of the rest of the imported products, including but not limited to imported foods, drugs, textiles and aircrafts (the chapters 1-24, 30, 41-67, 88, 93-97 in HS CODE).

The different RPCC is also responsible for risks analysis and controlling of the goods imported by different transportation methods. The RPCC in Shanghai is in charge of imported goods transported by airways, the RPCC in Qingdao is in charge of imported goods transported by water, and the RPCC in Guangzhou (Huangpu) is in charge of the imported goods transported by roadways.

3.Once declaration, Stepped processing

The new customs clearance process has been named "Once declaration, Stepped processing". That means the company, on the one hand, that imports the goods from a foreign country could make the customs declaration at the customs located in the port of importation, the local customs will only inspect the matters relating to the safety and admittance.

After passing the inspection of local customs, the company will pay the duty and imported tax according to the value declared by the company directly, then the good will be released by the local customs even if the declared duty and import VAT has not been verified by the customs.

On the other hand, the TCAC charging for imported goods will review the tax collection and administration elements declared by the company after the goods released.

If the TCAC has any doubt about the declaration of the company, it will communicate with the company and/or initiate an inspection process. This process will help the company save time in the entire customs clearance process.

4.Self-declaration, Self tax payment

According to the above mentioned "Once declaration, Stepped processing" process, the company that imported the goods needs to confirm the correct declaration elements regarding duty and imported VAT, then pay the duty and imported VAT accordingly.

Now, the "Self-declaration, Self tax payment" policy does not apply every company. Only companies that have obtained the General AEOs certificate or the Advanced AEOs certificate that falls under the regulation of this policy. But it may be applicable to all the companies registered in the customs in the near future.

5.New chance, New challenge

The new policy allows companies to make the customs declaration and pay the duty and imported VAT automatically becoming less time consuming. However, the customs declaration still poses a new challenge to the companies operating imported business in China since under the former customs district clearance system the customs declaration is reviewed by the local customs at first.

Hence, in case there is any mistake in the declaration, it is corrected by the local customs, and the company does not bear the risk as the false declaration or being suspected of being involved in the smuggling. By contrary, under the new nationwide customs clearance system, the company will not have the opportunity to correct the potential mistakes for a false declaration. It will bear the above mentioned risks.

First published 24/10/2017

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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