8 Dec 2003

1. Modifying article 20 into "Products processed by enterprises within zones, leftover materials, products of inferior quality, and wastrel produced in the course of processing and production by enterprises within zones should be transported across the border. In the case of special needs rendering the transportation out of zones a necessity, enterprises involved shall file applications with the competent customs authority, which verify the application, identify to which category the products concerned belong according to the state of the products when being sold domestically, and collect tax accordingly. In the case of commodities subject to import licensing, the products involved will be exempted from applying for import licenses. In the case of commodities listed in the Catalogue of Restricted Waste Capable of Being Used as Raw Materials, the enterprises involved shall file applications with the environmental protection authority for import licenses in line with the existing rules. If leftover materials and waste of no commercial value need to be transported outside zones to be destroyed, enterprises involved shall, on the strength of approval documents issued by the administration committee of the processing zone and environmental protection authority, go to the competent customs authority to handle the formalities related to the transporting of articles outside the zones, and customs shall exempt them from import licenses and taxation.

2. Article 44 is deleted.

In addition, reformulation has been undertaken on some articles, together with re-adjustment of articles accordingly.

This decision shall enter into force as of November 1, 2003.

Provisional Measures on Customs Supervision of the People's Republic of China Over Export Processing Zones

(Approved by the State Council on April 27, 2000, promulgated by Decree No. 81 of the Customs General Administration on May 24, 2000, amended on June 21, 2002, and revised again according to the Decision of the State Council on Amending the Provisional Measures on Customs Supervision of the People's Republic of China over Export Processing Zones on September 2, 2003.)

Chapter 1 General Principles

Article 1. This set of Measures, formulated in accordance with the Customs Law of the People's Republic of China and related laws and regulations of the State, aims to strengthen and improve administration over processing trade, standardize supervision of customs over export processing zones, promote the healthy development of export processing zones, and encourage the expansion of export.

Article 2. To avoid repetitive construction, export processing zones (hereinafter referred to as processing zones) within the People's Republic of China shall only be established in existing economic and technological development zones approved by the State Council and the application for the establishment of processing zones shall be submitted by the provincial (autonomous, municipalities directly under the State Council) people's governments to the State Council for approval.

Article 3. Processing zones are special areas under the supervision of customs, where customs set up agencies and exercise around-the-clock supervision over commodities entering and leaving the processing zones and related sites within the zones in line with the provisions of this set of Measures.

Article 4. Separation facilities and wired television monitoring system as requested by the customs shall be set up between processing zones and other regions within the People's Republic of China (hereinafter referred to as out of zone areas). Related business within the processing zones is not allowed to be initiated unless the separation facilities installed have passed the inspection and check organized by the Customs General Administration.

Article 5. The administration committee of the processing zone, export processing enterprises, warehousing enterprises providing services to export processing enterprises, and transportation enterprises approved by customs to specially engage in the transportation of commodities into and from processing zones shall be set up within processing zones.

Staff other than those handling security and those on duty for enterprise are not allowed to live in processing zones, nor shall profit-making facilities for daily living and consumption be set up within the zones.

Article 6. Commercial retailing, general trade, transit trade and other business irrelevant to processing zones are not allowed in the processing zones.

Article 7. Enterprises established within processing zones (hereinafter referred to as in-zone enterprises) shall register with the customs.

Article 8. In-zone enterprises shall, in line with the provisions of the Accounting Law of the People's Republic of China and related laws and regulations of the State, set up account books and statements conforming to the supervision requirements of customs, conduct book-keeping on the strength of lawful and valid certificates, verify book-keeping, and record the enterprise's commodities entering and leaving processing zones, inventory, transfer, shift, sales, processing, use and wastage of commodities of the enterprise.

Article 9. Processing zones shall apply computerized network administration and customs censoring system. In-zone enterprises shall set up computerized management databank conforming to the customs supervision requirements and connect with the customs for electronic data interchange.

Article 10. In-zone enterprises conducting processing trade are not requested to exercise a money machine account system of processing trade, and customs do not exercise administration over them according to the Registration Manual of Processing Trade.

Article 11. Customs are entitled to the right of conducting inspection and check in accordance with the provisions of the Customs Law of the People's Republic of China over commodities, articles, transportation vehicles and personnel entering and leaving processing zones and related sites within processing zones.

Article 12. The State does not impose VAT on processed products within zones.

Article 13. Commodities and articles prohibited by the State from being imported or exported are not allowed to be carried in or out of processing zones.

Chapter II  Supervision over Commodities being Transported To and From Processing Zones and Overseas

Article 14. In the case of commodities being transported to and from processing zones and overseas, the owner of the cargo or its agent shall, according to the approval of the administration committee of the processing zone, file a detailed list of the commodities entering and exiting the border with the customs. The list will be printed and distributed by the Customs General Administration in a unified manner.

Article 15. Customs supervises commodities transported to and from processing zones and overseas by means of direct access granting or customs transit transportation.

Article 16. Commodities transported to and from processing zones and overseas are not subject to import and export quota or licensing administration unless they are administered under the export passive quota system.

Article 17. Import duties and import linkage tax applicable to commodities transported from overseas into processing zones are handled in line with the following provisions, unless otherwise specified in laws and regulations:

1. machinery and equipment required by the construction of production infrastructure facilities within zones and basic construction materials needed for the construction of production workshops and warehousing facilities are exempted from paying duty;

2. machinery, equipment and moulds for production by enterprises within zones and spare parts for maintenance thereof are exempted from paying duty;

3. raw materials, spare parts, devices, packaging materials and consumption materials used by enterprises within zones for processing export products are granted bonded treatment;

4. office articles in reasonable amounts for self-use of enterprises and administration agencies within zones are exempted from paying duty;

5. transportation vehicles and living and consumption articles for self-use of enterprises and administration agencies within zones shall be declared to the customs in line with the relevant regulations on import commodities and duty shall be paid as requested;

Article 18. Finished products and leftover materials, residual materials, products of inferior quality, and wastrel produced by enterprises within zones in the processing course when being transported overseas are exempted from paying export duty, unless otherwise specified by laws and regulations.

Chapter III Supervision over Commodities Transported Into and Out From Processing Zones

Article 19. Customs shall handle the related customs clearance formalities for commodities transported out from processing zones as for imported commodities and impose duty applicable to finished products. In cases where the commodities are subject to licensing administration, valid import licenses shall also be issued to the customs.

Article 20. Products processed by enterprises within zones, leftover materials, products of inferior quality, and wastrel produced in the course of processing and production by enterprises within zones shall be transported across the border. In the case of special needs rendering the transportation out of zones a necessity, enterprises involved shall file applications with the competent customs authority, which shall verify the application, identify to which category the products concerned belong according to the state of the products when being sold domestically, and collect tax accordingly. In cases where commodities are subject to import licensing, the products involved will be exempted from applying for import licenses. In the case of commodities listed in the Catalogue of Restricted Waste Capable of Being Used as Raw Materials, the enterprises involved shall file applications with the environmental protection authority for an import licenses in line with the existing rules. In cases where leftover materials and waste of no commercial value need to be transported outside zones to be destroyed, enterprises involved shall, on the strength of approval documents issued by the administration committee of the processing zone and environmental protection authority, go to the competent customs authority to handle the formalities related to the transporting of articles outside the zones, and customs shall exempt them from import licenses and taxation.

Article 21. In-zone enterprises which are justified may transport related moulds and semi-finished products out of the processing zones for processing. Subject to approval of the governor of the competent customs authority of the processing zone, enterprises located outside the processing zones accepting the trust shall pay tariffs applicable to the commodities and deposit an equivalent amount to the import linkage VAT or deposit a letter of guarantee with the competent authority of the processing zone before handling the formalities related to transporting the commodities out from the processing zone. The term of entrusting enterprises outside processing zones for processing shall be verified by the competent customs having jurisdiction over processing zones in reference to the terms of the contract. Commodities processed shall be transported back into the processing zone within the specified period of time. In-zone enterprises shall, on the strength of a letter of application for entrusting enterprises outside processing zones for processing and related documents filed when leaving the processing zones, handle the formalities related to the inspection and verifications with the competent customs having jurisdiction over the processing zone, which should return the deposit or letter of guarantee without delay after completion of the formalities outlined above.

Article 22. Machinery, equipment, moulds and others sold from processing zones to out-of-zone-areas shall be handled according to the existing import policies and related regulations of the State.

Article 23. In-zone enterprises, subject to approval from customs, may conduct testing, inspection and exhibit their products outside the processing zones. The administration of customs over temporary importation of commodities may be referred to when handling the formalities related to products for testing, inspection and exhibit outside processing zones.

Article 24. In cases where machinery, equipment, moulds and office articles used within processing zones need to receive maintenance, testing or inspections outside processing zones, in-zone enterprises or administration bodies shall fill in a Liaison Notice of Transporting Commodities within Export Processing Zones Out for Maintenance and Inspection, file an application with the competent customs, and transport the said machinery, equipment, moulds and office equipment outside processing zones for service, testing or inspection after being verified, registered, and inspected by the competent customs.

In-zone enterprises transporting moulds outside processing zones for servicing, testing or inspection shall keep samples of products made with the moulds for inspection by customs of the moulds transported back into the zones.

Machinery, equipment, moulds, office equipment and others transported outside the processing zones for servicing, testing or inspection, are not allowed to be used for production and use outside the processing zones.

Article 25. Machinery, equipment, moulds and office equipment transported outside processing zones for servicing, testing or inspection shall be transported back into the processing zones within 2 months starting from the day of transportation-out. In cases where it is not possible to do so due to special circumstances, in-zone enterprises shall, 7 days before the expiration of the period allowed, give an explanation to the competent customs and apply for postponement. The period may be postponed only once, not exceeding 1 month.

Article 26. Machinery, equipment, moulds and office equipment transported outside processing zones for servicing when being transported back into the zones shall ensure that the customs are able to identify that they are the ones that were transported out from the zones or are new spare parts, accessories or fittings. However, in the case of change of new spare parts, fittings or accessories, the original spare parts, fittings or accessories shall be transported back into zones as well.

Article 27. Commodities transported into processing zones shall be taken as exported items and customs clearance shall be undertaken. Export tax rebate surrounding commodities mentioned above shall be handled according to the following provisions, unless otherwise specified:

1. for domestically manufactured machinery, equipment, raw materials, spare parts, devices, packaging materials transported from outside into processing zones for the use of in-zone enterprises, and basic construction materials in reasonable quantities needed for infrastructure construction, and production and office house construction of processing enterprises and administration bodies within zones, customs shall handle customs clearance formalities according the relevant regulations on export commodities, and issue customs declaration for export tax rebate. Enterprises outside the processing zones, on the strength of the section for export tax rebate of customs declaration, shall apply for export tax rebate or exemption to the taxation department, and the detailed measures governing the tax reduction or exemption will be worked out and released by the State Administration of Taxation separately.

2. customs will not issue customs declaration of export tax rebate for articles of daily use and consumption, transportation vehicles and others transported from outside into processing zones for the use of in-zone enterprises and administration bodies within processing zones.

3. for imported machinery, equipment, raw materials, spare parts, devices, packaging materials, basic construction materials and others transported from outside into processing zones, enterprises located outside processing zones shall provide customs with a list of the said commodities or articles and handle the export customs clearance formalities. The customs will grant access upon inspection. Import linkage tax collected from the above-mentioned commodities or articles will not be refunded.

4. In cases where commodities prohibited from export or subject to unified operations by the State are transported into processing zones for special production processes as domestic techniques are not up to the requirements of products, approval from the Ministry of Commerce shall be obtained. The customs shall supervise the process according to the measures governing processing with exported materials and not issue customs declaration for export tax rebate for commodities transported into processing zones.

Article 28. Commodities and articles transported from outside into processing zones shall be deposited in warehouses or locations designated by customs within the processing zones, and enterprises located outside the processing zones shall fill in export customs declarations and proceed with the competent customs having jurisdiction over processing zones with customs clearance formalities on the strength of the domestic purchase invoice and loading list.

Article 29. Commodities transported from outside into processing zones are not allowed to be transported overseas unless undergoing material processing by in-zone enterprises.

Chapter IV  Supervision over Commodities within Processing Zones

Article 30. In-zone enterprises transporting commodities to and from processing zones shall report to the competent customs in accordance with the facts and the customs will conduct inspection, grant access and proceed with verification of commodities being transported to and from processing zones according to the list on record and related documents.

Customs handling of record-filing, customs clearance, inspection, access-granting, and verification of commodities being transported to and from processing zones shall be within processing zones.

Article 31. Commodities within processing zones may be transferred or shifted among in-zone enterprises, and parties to the transfer or shift shall report the related items of the transfer or shift, including detailed name, quantity and value of commodities, to the customs for record-filing in advance.

Article 32. In-zone processing enterprises are not allowed to sell imported raw materials or spare parts not undergoing material processing outside processing zones. Enterprises providing warehousing services within processing zones are not allowed to provide raw materials or spare parts stored to enterprises located outside zones.

Article 33. In-zone enterprises shall, starting from the day of engaging in export processing business or warehousing business, go to the competent customs to handle the verification formalities once every 6 months, with their account books and related bills and documents.

Article 34. In cases where commodities transported into processing zones experience losses or damage in the course of processing or storage due to force majeure, the in-zone processing enterprises or warehousing enterprises shall report to the competent customs within 10 days upon discovering the losses or damages, together with explanations. The customs permit a reduction of the items involved in the account book after verification and confirmation.

Chapter V Supervision over Commodities Transported between Processing Zones

Article 35. In cases where commodities are to be transported between processing zones, the consignor and consignee shall jointly file applications to the competent customs having jurisdiction over the processing zone that transports out the commodities. The customs, after verification, shall handle the applications in line with the related regulations governing customs-transfer transportation.

Article 36. In cases where commodities are transported to other processing zones from a processing zone, the competent customs having jurisdiction over the receiving processing zones shall grant access to the commodities into plants or warehouses upon finding the seal intact and compliance between commodities and bills.

Article 37. In cases where commodities transported between processing zones cannot be handled as customs-transfer transportation, the competent customs having jurisdiction over the receiving processing zones shall collect deposit money equivalent to the value of commodities from the consignee, and return it to the enterprises from which the deposit is collected within 10 working days from when the commodities which have arrived in the processing zones are found to be in compliance with the bills concerned.

Chapter VI Supervision over Transportation Vehicles Entering and Leaving Processing Zones and Articles Carried by Individuals

Article 38. Transportation vehicles and staff shall enter and leave processing zones through a special path designated by customs.

Article 39. Processed products transported from processing zones overseas and commodities transported out from processing zones shall, after being granted access by customs upon inspection, be carried by specialized transportation enterprises established within zones and verified by customs. The following commodities, upon inspection and access being granted by the competent customs, may be carried by persons appointed by enterprises or transported by enterprises themselves:

1. small quantity articles valued at US$10,000 or less;

2. articles transported outside for processing for exchange due to inferior quality;

3. articles on which import duty has been paid;

4. other articles verified by customs.

Article 40. Persons responsible for vehicles entering and leaving processing zones transporting commodities shall, with their corporate legal person business licenses and lists of names, number, and license plate number of transportation vehicle and names of drivers, go to the customs to handle the record-filing formalities.

Operators of transportation enterprises carrying commodities into and out from processing zones or handling customs-transfer transportation shall observe the administrative rules of customs on transportation vehicles and cargoes thus carried, and be held liable for related legal responsibilities.

Article 41. Transportation vehicles and persons travelling out from processing zones are not allowed to transport or carry commodities within processing zones outside without approval from the customs.

Chapter VII Supplementary Articles

Article 42. Commodities transported from overseas into processing zones and from processing zones overseas are included in the import and export statistics. Commodities transported from outside into processing zones and out from processing zones are calculated individually. The detailed method of statistics will be worked out by the Customs General Administration separately.

Article 43. Violators of this set of Measures will be punished by the customs according to the relevant provisions of the Customs Law of the People' Republic of China and the Detailed Rules of Implementation of the Administrative Punishment of the Customs Law of the People¡¦s Republic of China.

Article 44. This set of Measures shall enter into force as of May 24, 2000.