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Trade and customs services

Trade and customs services

Chinese customs rules can be complicated and companies may only become aware of this after they are approached by customs for potential violations.

Chinese customs rules can be complicated.

Chinese customs rules can be complicated and companies may only become aware of the complexity of the rules after they are approached by Customs for potential violations.

China customs has been focusing on post-entry audits, mainly on customs valuation, classification, and "Processing Trade".

On one hand, the business is open to various duty savings opportunities, whereas, on the other hand, business operation is subject to customs' close supervision.



The central government authority with respect to import and export management in China is the General Administration of Customs (GAC). In addition, there are local customs offices that handle day-to-day customs matters and are subordinate to the GAC.

As a member of the World Trade Organization (WTO), China uses transaction value as the primary method of appraisement for imports. It is also a member of the World Customs Organization (WCO) and uses the Harmonized System for tariff classification of its imports and exports.

Non-tariff barriers such as import restrictions, import licensing requirements, complex customs regulations, stringent quality and quarantine procedures, and other administrative requirements continue to remain a concern for companies importing into and exporting from China.


Basis of duties and taxes

In general, duties are assessed in China on a Cost-Insurance-Freight (CIF) basis.

In accordance with its obligations under the WTO, China applies transaction value as the primary method of appraisement. Customs may use other valuation methodologies under the WTO appraisement hierarchy to determine the dutiable value.

Tariff rates in China may range from zero percent, for certain information technology products, whereas, rates for other products may differ from product to product. Consumption tax applies to the import of certain commodities such as alcohol, cigarettes, fuel, cosmetics, luxurious watches, golf clubs and automobiles. The consumption tax rate and base varies from product to product.

A 17 percent, 13 percent, or zero percent value added tax is imposed on imports based on the landed cost (i.e. CIF value of goods + duties + consumption tax).

Export duties are levied on some export products, including some mineral products, fertilizers and steel products.


Regulated commodities

A number of commodities require special permits and licenses from specific government agencies prior to importation to China. Examples of these include various classes of machinery and equipment, automobiles and chemical products.


Filing an import entry

Import entries are filed with Customs regardless of whether the imported articles are subject to duties or not. Importers should submit a set of documents including import declaration form, invoice, bill of lading and packing list.

The importer may undertake the filing process itself or entrust filing to a customs broker. Payment of duties and taxes is usually processed through authorized electronic methods and agent banks.


Current risks to companies

GAC rules are complex, frequently amended and are sometimes subject to further clarification.

China customs is becoming more and more sophisticated in targeting companies for valuation, classification and Processing Trade audits.


Self-audit by companies

China Customs offers an opportunity for companies to perform a self-audit and voluntarily disclose violations to Customs. If there were underpayment of duties identified during the self-audit, additional duties and taxes will be collected. Potential penalty may be waivered or reduced.



Regarding smuggling or violation of customs laws regulations, Chinese customs can conduct criminal investigation, administrative investigation and administrative punishment. Due to confidentiality procedure of Customs anti-smuggling bureau, and non-publicised internal handling procedures, sometimes it is difficult for the enterprises involved to have a clear picture about the development of the case in advance. In the meantime, there may be chances of mitigating or exempting related penalty too.


Temporary importation

Certain commodities can be imported on a temporary basis, and some are entitled to duty-free treatment on the condition that they are re-exported within a stated timeframe. These commodities include exhibit pieces, demonstration units and containers for goods. A guarantee deposit may be required before importing these items.


Processing trade

General speaking, raw materials imported under the processing trade regime may enjoy duty-free treatment on the condition that the finished goods will be exported. The Processing Trade regime is widely used and accounts for a significant proportion of import and export transactions in China. 


Credit management of enterprises

GAC replaced the enterprise management system with a more simplified system of classification to bring it in line with internationally accepted best practices. The current system that divides enterprises into five categories (AA, A, B, C and D) will be replaced by a simplified system with four category levels (Advanced Certified Enterprises, Generally Certified Enterprises, Regular Credit Enterprises and Discredited Enterprises. However, instead of a one-time classification, enterprises of a high credit standing will be re-evaluated from time to time within a dynamic adjustment system, which would demand a higher level of customs management from enterprises.


Customs IT solution

Most of the daily tasks in global trade management and customs operation area can be automated by professional IT solutions. Including but not limited to paperless filing and archiving; STR (Special Trade Regimes including processing trade and bonded warehouse management) automated reconciliation, as well as various precise data transparency reports in a good time manner.

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