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China: New policies for comprehensive bonded zones

China: New policies for comprehensive bonded zones

China’s customs administration along with other agencies including the State Administration of Taxation and Ministry of Commerce jointly published a draft version of “opinions” for promoting comprehensive bonded zones (CBZs).


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The opinions would aim at developing CBZs into globally advanced centres for five types of operations:

  • Processing and manufacturing
  • Research and development (R&D) and design
  • Logistics and distribution
  • Inspection and maintenance
  • Sales and services


Since 1990, China has introduced six types of special customs supervision areas, ranging from free trade zones to export processing zones, bonded logistics parks, bonded ports, cross-border industrial zones, and CBZs that were introduced later. A common feature of the different types of special customs supervision areas is that goods are allowed to enter these areas free from customs duty and other import taxes. However, since each type of special area has its own characteristics, their advantages and limitations are different when engaging in different businesses.

Due to the different functions of each type of special area, the State Council published the guidance in 2012 to propose that the existing export processing zones, bonded logistics parks, bonded ports, cross-border industrial zones, and other eligible bonded zones be gradually converted into CBZs with unified requirements. In principle, any newly established special supervision area would be a CBZ. 

KPMG observation

CBZs are the most advanced special customs supervision area and play an important role in promoting foreign trade, attracting foreign investment, leading new industry and promoting the comprehensive development of the special supervision areas. With new policies for CBZs being released, CBZs will play an even more important role in the future.

New policies for CBZs

The opinions state that CBZs are to be developed into "five centres," meaning that CBZs would extend their focus from traditional functions like export processing and logistics distribution to other business areas such as research, development, innovation, inspection, testing, and sales services in order to cultivate new advantages in the international market. With regard to the 21 specific measures for CBZs, there are the following developments:

  • “VAT general taxpayer” status would be granted to enterprises in CBZs.
  • Domestic sales of cell phones and automobile parts manufactured in CBZs would be exempted from automatic import licence requirements.
  • Goods and articles imported into CBZs for R&D purposes would be exempted from import licence requirements, and imported consumable R&D materials would be reconciled in accordance with consumption.
  • The bonded storage and display of automobiles in CBZs would be permitted at designated automobile import ports.
  • Based on logistical needs, financial leasing enterprises registered in CBZs would be allowed to declare imported and exported large-scale equipment (such as aircraft, ships and ocean infrastructure) to CBZ customs without the equipment actually entering the CBZ, as long as effective supervision and enforcement of relevant tax policies can be assured.

Read a February 2019 report prepared by the KPMG member firm in China


For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner and Global Practice Leader
T: 312-665-1022

John L. McLoughlin
Principal and East Coast Leader
T: 267-256-2614

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094

Irina Vaysfeld
T: 212-872-2973

Amie Ahanchian
Managing Director
T: 202-533-3247

Robert Waldrop
T: 212-954-8117

Gisele Belotto
Managing Director
T: 305-913-2779

Christopher Young
T: 312-665-3229

Andy Doornaert
Managing Director
T: 313-230-3080

George Zaharatos
T: 404-222-3292

Jessica Libby
Managing Director
T: 612-305-5533

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