GACC Announcement No.69, 2016 on Outbound Processing Business Control

1. The “outbound processing” business herein means that qualified enterprises in China commission overseas enterprises to process with the raw materials, components or semi-finished products supplied by the Chinese enterprises, and re-import the processed products to China within time limit by paying relevant processing fees plus overseas material fees.

2. In order to undertake outbound processing, an enterprise must meet all the following requirements:

(1) Credit rating is not less than the generally accredited firm;
(2) Without the goods banned and restricted by the state from entry/exit;
(3) Without the goods subject to export duties

3. Under any of the following circumstances, an enterprise shall be prohibited from outbound processing business:

(1) Suspected of smuggling and other violations under Customs investigation;
(2) Failing to timely declare expired processing accounts to the Customs

4. The goods used for outbound processing are not subject to processing-trade ban, restriction, deposit, and unit consumption regulations.

5. The Customs shall control the outbound processing goods by means of account record. Before electronic system application, paper account may be applied to the control. Regarding outbound processing business, an enterprise shall keep relevant accounts, statements and other documents in accordance with Customs requirements.

6. An enterprise with outbound processing shall go through account setup formalities with local Customs authority by submitting the following documents:

(1) Outbound processing contract;
(2) Production process description;
(3) Goods picture or sample;
(4) Other documents required

In general, the Customs shall finish the setup formalities within 5 workdays upon approval of the setup application; the account period shall be one year.

7. In account setup formalities, the applicant shall truthfully declare the port of entry/exit, commodity name, HS code, quantity, specification, price, country of origin, etc.; where overseas materials are used, they shall also declare the quantity and value of the overseas materials. Where the account has change in content, the alteration formalities shall be undertaken with the Customs within the account expiring date.

8. Export and re-import of outbound-processing goods shall go through the same port in the declaration method as follows:

(1) Regarding the export, the exporter shall make Export Declaration Form under the control mode “Export Materials for Processing” (code 1427) and taxation mode “all exempted”, and provide account number in remark or registration column.

(2) Regarding the re-import, the importer shall make Import Declaration Form under the control mode “Export Materials for Processing” (code 1427); HS code shall be provided in line with actual inspection status. Each re-imported goods shall be declared in two commodity items: one declares the value of originally exported goods and the actual quantity of re-imported goods, with taxation mode as “all exempted”; the other declares overseas processing fee, material fee, re-import transport fee and insurance fee, with taxation mode as “taxed by rule” for commodity quantity of 0.1. Account number shall be provided in remark or registration column.

9. Where outbound-processing goods are re-imported within time limit, the Customs shall determine the goods duty-paid value on the basis of overseas processing fee, material fee, re-import transport fee and insurance fee.

10. Where outbound-processing goods are returned because of quality or specification incompliance, relevant enterprise shall, as per return (control code 4561) regulations, undertake the return formalities with the Customs within account write-off period; where the goods are re-imported beyond return deadline or account write-off period, the enterprise shall undertake import formalities as per ordinary trade regulations.

11. Outbound-processing account shall be written off in the following ways:

(1) Where the account is on the enterprise’s own, the enterprise shall submit its account to the Customs for the write-off purpose within 30 days upon the termination of the account write-off period.
(2) Where outbound-processing goods cannot be re-imported within time limit, the enterprise shall timely make written explanation to the Customs; and the Customs may accordingly verify or deduct the re-import quantity.
(3) Where the enterprise fails to declare its account within time limit, the Customs may directly write off the overdue account.
(4) Regarding imbalance and other abnormalities in the account, the enterprise shall make written explanations to the Customs before account write-off.

12. The Customs may, where necessary, conduct field inspection and investigation into the outbound-processing enterprises.

13. This Announcement shall enter into force as from 30 November 2016. Where pilot outbound processing is not compliant with Article 2 of this Announcement, relevant contracts may be implemented before 1 December 2018 and, during the transition period, it is unnecessary to set up new account for the outbound processing involved.

Annex: Outbound Processing Account Template (omitted)




General Administration of Customs of China (GACC)
November 28, 2016