China: Facilitating development of bonded refurbishment of medical equipment

New rules facilitating bonded refurbishment of imported medical equipment in China

New rules facilitating bonded refurbishment of imported medical equipment in China

The Chinese State Council issued Circular Guobanfa [2021] No. 24 (2 July 2021) to direct government authorities to set new rules facilitating the bonded refurbishment of imported medical equipment in China.

  • In directing the government authorities to set new rules to facilitate the development of China’s bonded equipment refurbishment sector, there would be support provided with regard to such activities in comprehensive bonded zones, including activities provided by “pilot” free trade zone businesses. Provincial governments will be responsible for initiating and monitoring this development. Refurbishment carried out on a bonded condition means that the equipment will not be subject to import taxes at the time when it is brought from overseas into the comprehensive bonded zones. Furthermore, refurbishment services performed by businesses established in comprehensive bonded zones to overseas entities would generally be exempt from value added tax (VAT).
  • The State Council directed that the catalogue of refurbished products is to be updated on an ongoing basis, with consideration of including medical equipment and other products as part of the catalogue. The refurbished items would need to be imported from and exported to overseas.
  • The State Council also directed that pilot arrangements are to be explored to allow qualifying businesses, located outside of comprehensive bonded zones, to start bonded refurbishment activities for their self-manufactured and exported products. The pilot refurbishment activities are not only to be of a high-tech and high-value nature, but also are to meet the prescribed environmental production requirements.
  • A more comprehensive policy for bonded refurbishment is expected by 2025.

The circular was issued in recognition that there are certain opportunities for businesses in China with regard to the advanced medical equipment sector (e.g., high-end medical scanners). While medical equipment businesses have seen a surge in sales, they are also facing challenges in fulfilling after-sales service needs. The increasing needs for and the heavy usage of the machines has in turn led to increased demand for refurbishment and after-sales services. It is anticipated that the guidance will open up opportunities for global advanced medical equipment businesses in China.


For more information, contact KPMG’s Trade & Customs global practice leader:

Doug Zuvich | +1 312 665 1022 | dzuvich@kpmg.com 

 

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