GACC Announcement 7, 2012 on Processing-Trade Duty Relief

Upon approval by the State Council of China, where, from 1 July 2011 till 31 December 2012, a legal-personality enterprise is established by any non-legal-personality enterprise processing foreign-client-supplied materials (hereinafter referred to as the "processing factory") with all of its foreign-client-supplied non-priced equipment as its investment; OR where, from 1 July 2009 till 31 December 2012, such non-priced equipment are entirely transferred by the processing factory as its investment into an established legal-personality enterprise belonging to the same foreign investor:

Exemption from replenishment of duties and import value-added taxes (VAT) may be applied to such non-priced equipment which are registered under processing trade on/before 31 December 2008 and declared on/before 30 June 2009 for import but still within customs supervision period.

Where the non-legal-personality processing factory is transformed into a legal-personality enterprise from 9 September 2008 till 30 June 2009, its non-priced equipment, which are already transferred to the legal-personality enterprise but still under customs supervision, may be treated as its investment and shall be exempted from duties and import VAT.

The GACC hereby announces the issues relating to the implementation thereof:

Article 1 Where applying for the above duty preferences, the foreign-invested legal-personality enterprise shall apply to local governing customs for duty reduction/exemption over all the relevant non-priced equipment before 31 December 2012, and undertake relevant formalities based on approval by the governing customs as per the Administrative Measures Of China Customs On Duty Reduction/Exemption For Imports & Exports (GACC Decree No. 179).

Article 2 When applying for the duty relief, the price declared for the non-priced equipment shall not be more than that declared on its original import and shall be counted into the total investment of the foreign-invested legal-personality enterprise. The periods of customs supervision on the non-priced equipment shall be counted consecutively.

Article 3 Approval formalities for the compliant duty reduction/exemption shall fall under the Duty-Relief Management System, and the supervision mode is: Duty-Relief Equipment Carry-over (code: 0500); the levy/exemption property is: State-Approved Duty Relief (code 898); for the Certificate of China Customs on Duty Levy/Exemption for Imports & Exports (hereinafter referred to as the "Duty Levy/Exemption Certificate"), its remark column shall be marked "transformed from the processing factory, transformed from Manual No. D×××".

Article 4 The above foreign-invested legal-personality enterprise shall submit the following documents when applying for approval of the duty reduction/exemption:

(1) Regarding the legal-personality establishment invested with all the foreign-supplied non-priced equipment, the required shall be the approvals by municipal commerce administrations on the transformation into foreign-invested legal-personality enterprises and confirmed lists (original) of non-priced equipment; Regarding the entire transfer to an established legal-personality enterprise of the same investor, the required shall be the processing agreement and its supplements approved by municipal commerce administrations and confirmed lists (original) of non-priced equipment.

(2) Copies of the Approval Certificate For Foreign-Invested Enterprise and of the Business License of the foreign-invested legal-personality enterprise (the original are also needed for examination).

(3) Relevant processing-trade manuals on non-priced equipment and copies of the forms of customs declaration for import.

(4) Other documents required by the customs.

Article 5 From 1 July 2011 till 31 December 2012, where a new legal-personality enterprise is established by the processing factory with foreign-client-supplied non-priced equipment as its investment, or from 1 July 2009 till 31 December 2012, where such non-priced equipment are entirely transferred as investment into an established legal-personality enterprise of the same foreign investor, the legal-personality enterprise and the processing factory shall fill in the Form Of Customs Declaration For Import and the Form Of Customs Declaration For Export respectively, filling in the "File No." columns thereof with the Duty Levy/Exemption Certificate number and the processing-trade manual number respectively.

Upon completion of the above declarations, the processing factory shall, upon the non-priced-equipment-carried export declaration form, apply for writing-off of the non-priced-equipment manual to responsible manual-recording customs house.

Where, before the release of this Announcement, all of the non-priced equipment are invested by the processing factory into the establishment of a new legal-personality enterprise or entirely transferred to an established legal-personality enterprise of the same foreign investor, along with consequent termination of the processing factory, the foreign-invested legal-personality enterprise may undertake customs formalities as per Article 6 regulations as follows.

Article 6 Where, from 9 September 2008 till 30 June 2009, the processing factory was entirely transformed into a legal-personality enterprise, regarding the non-priced equipment already carried over to the legal-personality enterprise but still under customs supervision, the foreign-invested legal-personality enterprise shall fill in the Form Of Customs Declaration For Import and the Form Of Customs Declaration For Export, filling in the "File No." columns thereof with the Duty Levy/Exemption Certificate number and the numbers of processing-trade manuals of both the legal-personality enterprise and the processing factory.

Upon completion of the above declarations, the foreign-invested legal-personality enterprise shall, upon the non-priced-equipment-carried export declaration form, apply for writing-off of the non-priced-equipment manual to responsible manual-recording customs house.

Article 7 Where, from 1 July 2009 till one day before the release of this Announcement, the processing factory finishes transferring part of its non-priced equipment, whose processing-trade manuals were registered on/before 31 December 2008 and whose import declarations were made on/before 30 June 2009, to an established legal-personality enterprise of the same foreign investor, it shall finish the transfer of any remaining equipment to the legal-personality enterprise no later than 31 December 2012 so that such equipment may be treated as its investment and duties and import VAT may be exempted for them.

Therein, regarding the non-priced equipment already transferred to the legal-personality enterprise but still under customs supervision, customs formalities shall be undertaken as per the Article 6 regulations herein; regarding the non-priced equipment not transferred thereto but under customs supervision, customs formalities shall be undertaken as per the Article 5 regulations herein.

Article 8 With respect to the non-priced equipment registered on/after 1 January 2009 or the establishment of a foreign-invested legal-personality enterprise invested with the non-priced equipment that are registered before 31 December 2008 but declared on/after 1 July 2009 for import, where the new establishment is engaged in China state-encouraged industries or foreign-invested advantageous projects in middle/western China, exemption from duties may be applied to the transfer as per current policies/regulations of China (where the import VAT is levied upon original import, the transfer shall be exempted from the VAT).


February 6, 2012