MOF Notice [2014] No.65 on Suzhou & Chongqing Bonded Areas’ Trade Diversity Pilot Policies

To Jiangsu Province and Chongqing Municipality's authorities of finance and state taxation, Nanjing Customs District, and Chongqing Customs District:

In accordance with State Council approval (GuoHan [2014] No.125), hereby announced are the matters concerning pilot adjustment of taxation regulations for Suzhou Industrial Park Comprehensive Bonded Area and Chongqing Lianglu-Cuntan Bonded Port Area to promote trade diversity therein:

1. The pilot adjustment of taxation regulations will be carried out within Suzhou Industrial Park Comprehensive Bonded Area and Chongqing Lianglu-Cuntan Bonded Port Area respectively for the purpose of trade diversity promotion therein.

2. Within Suzhou Industrial Park Comprehensive Bonded Area and Chongqing Lianglu-Cuntan Bonded Port Area respectively, special areas will be demarcated as trade functional zones to carry out trading, logistics and simple product processing under the taxation policies as follow:

(1) Unless otherwise regulated, bonded treatment will be granted to the goods into the aforesaid trade functional zones from abroad or from domestic special Customs-control areas and bonded supervision premises.

(2) Non-bonded goods will be permitted into the trade functional zones; export tax refund will be available to the goods from domestic non-Customs-control areas into the trade functional zones only after their exit from China on the strength of their Export Declaration forms (for tax refund); eligible firms based within the trade functional zones will be accorded the status of ordinary Value Added Tax payer.

(3) As regards bonded goods into the trade functional zones from abroad or from domestic Customs-control areas and bonded supervision premises, their sale within the trade functional zones will be still under bond; however their sale outside will be subjected to import duties from the Customs and to value added tax (VAT) as per domestically sold goods from the taxation bureaus.

(4) Except the bonded goods, other goods, where being sold inside or outside the trade functional zones, will be subjected to VAT from the taxation bureaus as per domestically sold goods.

(5) The trade functional zones will not carry out tax exemption for importing machinery, equipment and infrastructure materials as comprehensive bonded areas and bonded ports do.

3. The demarcation of the aforesaid trade functional zones, acceptance of supervisory facilities and management systems therein, etc. will be in the charge of the General Administration of Customs (GACC) in concert with the Ministry of Finance (MOF) and the State Administration of Taxation (SAT). The taxation policies aforesaid will be put into practice after the trade functional zones are all officially approved.

4. Local authorities of finance and state taxation, Nanjing Customs District and Chongqing Customs District are required to advance the taxation policies herein by means of relevant supervision and services. The taxation bureaus need to improve the VAT collection and management over the trade functional zones. The MOF, GACC and SAT will, based on their assessment of the pilot adjustment, continue to optimize the taxation policies and timely propose the expansion of such policies to other bonded areas in China.

Ministry of Finance of China (MOF)
General Administration of Customs of China (GACC)
State Administration of Taxation of China (SAT)

December 19, 2014