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Customs Policy Update - for the Period of August 2019

Customs Policy Update - for the Period of August 2019

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Monthly Update on Customs Policies, August 2019

Announcement on the Imposition of Retaliatory Tariffs on Some Imported Goods of US Origin (the Third Batch) (Tariff Commission Announcement [2019] No. 4) 

On 15 August 2019, the US government announced it would impose a 10% retaliatory tariff on commodities imported from China amounting to USD 300 billion in value. These tariffs will be implemented in two batches starting 1 September and 15 December 2019. China's Tariff Commission announced on 23 August 2019 that it would impose 10% and 5% retaliatory tariffs on 5,078 commodities originating from the US. These commodities amount to about USD 75 billion in value. These tariffs will also be implemented in two batches starting from 1 September and 15 December 2019.

For detailed information, please click here.

Announcement on the Resumption of Retaliatory Tariffs on US Origin Autos and Auto Parts (Tariff Commission Announcement [2019] No. 5)

China's Tariff Commission announced on 14 December 2018 that it would temporarily suspend retaliatory tariffs on autos and auto parts for 3 months starting from 1 January 2019. On 31 March 2019, the Tariff Commission announced that the aforementioned retaliatory tariffs on US origin autos and auto parts would continue to be suspended. The deadline for the suspension will be notified separately.

With the continued escalation of trade friction between the US and China, the Tariff Commission issued an Announcement on 23 August 2019 in response to the new round of retaliatory tariffs that had been imposed by the US. The Announcement stated that retaliatory tariffs of 25% and 5% on US origin autos and auto parts (211 items in total) would be resumed starting 15 December 2019.

For detailed information, please click here.

Announcement on Spot Check Inspections of Import and Export Commodities in 2019 in Addition to Statutory Inspections of Commodities (GAC Announcement No. 132 [2019])

In order to effectively protect the rights and interests of consumers, and in accordance with the relevant provisions of the Law of the People's Republic of China on Import and Export Commodity Inspections and its implementation regulations, the General Administration of Customs (“GAC”) has been conducting spot check inspections on some import and export commodities, in addition to statutory inspections, since 12 August 2019. The range of commodities that is subject to spot check inspections includes 7 imported commodities, such as stationery, and 12 export commodities, such as holiday string lights.

For detailed information, please click here.

Announcement on the Supervision of the "Check-through" Process for International Flights (GAC Announcement No. 133 [2019])

In order to facilitate the entry and exit of transit passengers, GAC decided to allow "check-through" for international flights starting on 12 August 2019. "Check-through" refers to a process by which passengers flying in or out of the country can complete the check-in formalities that would normally take place at both the departure and transit station at the departure station alone (i.e. the border port where the passengers first arrive or last leave). Customs performs inspection and quarantine procedures on the passengers' checked baggage and carry-on baggage at the transit station, and the passengers can pick up their checked baggage at the destination station.

In order to conduct the international "check-through" process, the airport operator should set up a special international transit lounge and customs transit inspection area to ensure that the transit passengers are controllable and meet customs' supervision and inspection requirements. In order to meet customs supervision requirements, the air transport enterprise should accept the passenger's authorisation to cooperate with customs to open the baggage for inspection. Entry and exit passengers no longer need to check their baggage twice when they take transit flights. Their checked baggage can be picked up directly at the destination after customs' inspection at the transit station.

For detailed information, please click here.

Announcement on the Implementation of Special Safeguard Measures for Imported Beef of Australian Origin in 2019 (GAC Announcement No. 135 [2019])

According to the Free Trade Agreement between the Chinese and Australian governments, China will apply special safeguard measures with respect to eight types of agricultural products that originate from Australia. As of 15 August 2019, six types of beef to which these measures apply (HS Codes: 02011000, 02012000, 02013000, 02021000, 02022000, and 02023000) have exceeded their actual importable quantities for 2019. As a result, since 17 August 2019, beef imports that originate from Australia and that fall under the aforementioned 6 types are again subject to the MFN tariff rate.

For beef imported to the special customs supervision area and first declared during the period from 17 August 2019 to 31 December 2019 (except for beef imports in transit), regardless of whether the declaration for transferring the beef out of the special customs supervision area is made in the current year or next year, the conventional rate will not be applied.

For detailed information, please click here.

Announcement on the Revised Administrative Measures for the Origin of Import and Export Goods under the Comprehensive Economic Cooperation Framework Agreement between the People's Republic of China and the Association of Southeast Asian Nations (GAC Announcement No. 136 [2019])

According to GAC Announcement No. 136 [2019], the Protocol of the Revised Comprehensive Economic Cooperation Framework Agreement between the People's Republic of China and the Association of Southeast Asian Nations and the Partial Agreement came into effect on 20 August 2019. On the same day, the new version of China-ASEAN Form E also came into effect. The main changes in the revised Agreement are as follows: 

  • Improved rules of origin: The number of origin criteria has been increased from 3 to 5. Additions include PE rules and CTH rules based on the rules for WO, RVC and PSR.
  • Easier access to certificates: The cap that restricted product names to 20 per each Form E has been cancelled, and manufacturers can also apply for Form E.
  • The document requirements under the direct shipping rules are now more in line with trade practices. Specifically, the document submission requirements for transit goods have been simplified.

For detailed information, please click here.

KPMG published a China Tax Alert regarding this policy in September 2019. For details, please click here.

Announcement of the State Administration of Taxation, the Ministry of Finance and the GAC on Promoting the Pilot VAT General Taxpayer Qualification in Comprehensive Bonded Zones (State Administration of Taxation Announcement No. 29 [2019])

In accordance with the Opinions of the State Council on Promoting the High-level Opening Up and High-quality Development of Comprehensive Bonded Areas (Guo Fa [2019] No. 3), the State Administration of Taxation ("SAT"), the Ministry of Finance ("MOF") and the GAC jointly issued the Announcement on Promoting the Pilot Project for the VAT General Taxpayer Qualification in Comprehensive Bonded Zones (SAT Announcement No. 29 [2019]) on 8 August 2019 ("the Announcement") to promote the pilot VAT general taxpayer qualification in comprehensive bonded zones. The Announcement clarifies records management procedures for the pilot VAT general taxpayer qualification, and further emphasises the basic conditions and preferential policies under which enterprises can apply for the pilot VAT general taxpayer qualification.

The Announcement was effective upon its release. SAT, MOF and GAC Announcement No. 65 [2016]; SAT, MOF and GAC Announcement No. 5 [2018]; and SAT, MOF and GAC Announcement No. 6 [2019]) were repealed simultaneously. The 48 customs special supervision Zones listed in the above 3 Announcements, including the Kunshan Comprehensive Bonded Area, should continue to carry out pilot projects for the VAT general taxpayer qualification in accordance with the 8 August Announcement.

For detailed information, please click here.

KPMG published a China Tax Alert regarding this policy in August 2019. For details, please click here.

Notice on the Overall Plan for the Lingang New Area in the China (Shanghai) Pilot Free Trade Zone (Guo Fa [2019] No. 15)

On 6 August 2019, the State Council issued the Overall Plan for the Lingang New Area in the China (Shanghai) Pilot Free Trade Zone, and agreed to expand a new area in the China (Shanghai) Pilot Free Trade Zone (“PFTZ”). The plan provides macro guidance in terms of overall requirements, and provides for the establishment of a system centred on investment and trade liberalisation, the establishment of a comprehensive risk management system, the construction of an open industrial system with international market competitiveness, and accelerated implementation. Compared with other areas in the Shanghai PFTZ, the Lingang New Area has new characteristics, such as clearer and higher positioning, richer strategic tasks, and more prominent industrial development.

For detailed information, please click here.

Notice on the Overall Plan for Six New PFTZs (Guo Fa [2019] No. 16)

On 26 August 2019, the State Council issued its Approval for the Establishment of Six New PFTZs and the Overall Plan for Six New PFTZs (referred to below as "the Overall Plan"). According to the overall plan, in the future six new PFTZs will be set up in Shandong, Jiangsu, Guangxi, Hebei, Yunnan and Heilongjiang; and different pilot reform objectives will be proposed for each of them. This will bring the total number of China PFTZs to 18. 

For detailed information, please click here.

Local Customs Policy Updates

Xi'an Customs' Announcement on Optimising Enterprise Registration Procedures (Xi'an Customs Announcement No. 20 [2019])

On 22 August 2019, Xi'an Customs issued an announcement regarding the customs registration process for enterprises. Enterprises under the supervision of Xi'an Xianyang Airport Customs, Xi'an Station Customs and Guanzhong Customs can apply to register as an importer of record ("IOR") or exporter of record ("EOR") in the five customs offices nearby, including the Xi'an Xianyang Airport Bonded Logistics Center. Additionally, enterprises can make inquiries regarding the status of their liquidation process on Shaanxi province's "Online Platform for Enterprise Liquidation." Enterprises can also use the platform to print their IOR or EOR receipt with the special seal stamped on it.

For detailed information, please click here.

Nanjing Customs' Notice on the Operation of the Clearance Management System for Enterprise Issues 

Nanjing Customs has developed the Clearance Management System for Enterprise Issues (Clearance System), and it has been operational since 20 August 2019. When enterprises encounter complex and difficult problems that affect business development and need customs assistance, they can use the Clearance System (the web-site or the WeChat platform) to submit a description of their issues to customs.

For detailed information, please click here.

Contact us

Northen Region 
Eric Zhou

China Trade and Customs Services
Lead Partner
Email: ec.zhou@kpmg.com
Tel: +86 (10) 8508 7610

Helen Han    
Partner 
Email:h.han@kpmg.com
Tel:+86 (10) 8508 7627       

Eastern and Western Region
Anthony Chau 

Partner
Email: anthony.chau@kpmg.com
Tel: +86 (21) 2212 3206

Dong Cheng
Partner
Email: cheng.dong@kpmg.com
Tel: +86 (21) 2212 3410

Rachel Tao
Director
Email: rachel.tao@kpmg.com
Tel: +86 (21) 2212 3473   

Southern Region
Grace Luo
Partner
Email: grace.luo@kpmg.com
Tel: +86 (20) 3813 8609

Vivian Chen
Partner
Email: vivian.w.chen@kpmg.com
Tel: +86 (755) 2547 1198

Phillip Xia
Director
Email: philip.xia@kpmg.com
Tel: +86 (20) 3813 8674

Hong Kong
Daniel Hui   
 
Partner
Email: daniel.hui@kpmg.com
Tel: +852 2522 7815

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