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GENERAL IMPORT CLEARANCE INFORMATION

Clearance Process
Working with Customs officials throughout the world, FedEx has developed innovative technology to eliminate many steps of the paperwork-handling process and expedite the movement of international shipments. An example in China is the FedEx Express clear Electronic Customs clearance system. Starting at the origin location, state-of-the-art technology allows the processing of shipment paperwork and electronic transmission of documents to the designated FedEx hub and destination clearance location.

The Express clear system also keeps a database of regulatory information, which includes; importers' numbers, broker designations, corporate contact names and telephone numbers. At a FedEx hub, international shipments are sorted, scanned and loaded onto an international flight. Vital shipment information is keyed into a worldwide manifest database, which is linked to computer systems operated by brokers and Customs officials in many countries. Even before the plane has taken off, or while it is in the air, Customs agents and brokers at the destination airport of entry can begin examining shipping manifests, querying air waybill data for more details, assessing duties & taxes and selecting the shipments they wish to examine. By the time the plane arrives at its destination, many packages have already been cleared by Customs.

As the plane is unloaded, the Expressclear system identifies packages to be examined and prints "cleared" Customs labels for all others. Cleared shipments are transferred to trucks for immediate delivery. International shipments are scanned at all key points throughout the process which allows for up-to-date status reports including when Customs clearance is obtained.

There are over 700 Customs and branch offices in China located in airports, seaports and other places that service importers and exporters.

Customs issues laws and regulations to the various transportation channels. The "Regulations on Air Express Shipments," which went into effect on January 25, 1998, outline basic guidelines for the clearance of express shipments. Customs may adjust their regulations and duty & tax rates from time to time according to internal and external economic conditions.

Import Shipment Classifications

There are three Customs entry categories each with specific documentation requirements and procedures.

Category 1: Documents

This category includes documents, contracts, tickets, accounting statements, invoices, training materials & etc. These items have no commercial value. Books, Diskettes, CD's, VCD's, and DVD's are not included. The quantities and values of these should be reasonable. Documents of this category are declared through the simplified clearance process and the KJ1 Declaration Form of Import and Export Express Shipment is required and must be completed by the broker.

Since China Customs does not accept declaration of shipments without a commercial value, the minimum declared value should be US $1.

Category 2: Personal Effects

Personal effects refer to separately shipped passenger's luggage, gifts exchanged between relatives and friends, and other personal effects. Personal effects must be declared as personal effects, be of a reasonable quantity and must be for personal use.

Shipments from Hong Kong, Macao, must show the declared value less than 800 CNY and the assessed duty and tax value must be less than 400 CNY.

For other countries, the declared value must be less than 1,000 CNY and the assessed duty and tax value must be less than 500 CNY.

Personal effects are declared through the simplified clearance process and the Personal Effects Form is required.

Category 3: Cargo

Import cargo are further classified into 3 subcategories:

1.) Non-dutiable samples and advertising material:

Samples are goods imported as reference items for placing an order, and advertising material is advertising or promotion material imported for the promotion of the relevant product. Non-dutiable samples and advertising materials include:

  1. Samples and advertising material without a commercial value
  2. Samples and advertising material with a commercial value less than 400 CNY
  3. Shipments in which the assessed duty and tax is less than 50 CNY
Non-dutiable samples and advertising material must be declared as "XXX as sample" or "XXX as advertising material" on the Airway Bill and the Commercial Invoice. Samples and advertising material are cleared through the simplified clearance process, and the KJ2 Declaration Form of Import and Export Shipment is required and must be completed by the broker.

Note: Commodities controlled by a license or those for which foreign exchange is required and need to be paid upon import, are excluded from this category.

2.) Dutiable samples and advertising material:

Shipments of this category are those samples or advertising material for which customs duties shall be levied. They must be declared as "XXX as sample" or "XXX as advertising material" on the Airway Bill and the Commercial Invoice. Samples and advertising materials are cleared through the simplified clearance process, and the KJ3 Declaration Form of Import and Export Express Shipment is required and must be completed by the broker.

NOTE:

  1. Commodities controlled by a license or those for which foreign exchange need to be paid upon import are excluded from this category.
  2. Samples and advertising material of mechanical and electronic products valued at 5,000 CNY or less are not subject to the Mechanical and Electronic Product Import Certificate, but they are still subject to import duty and tax.


3.) Formal Entry Shipments:

This category includes:

  • Shipments not belonging to the above categories
  • Shipments containing commodities requiring an import license/permit, quota, or other special clearance documentation
  • Shipments for which foreign exchange need to be paid upon import. In this case, the shipment is automatically classified as a category D regardless of its value and the consignee is required to obtain an individual declaration form, which serves as an import certificate. The declaration can then be used by the bank to make payment to the foreign vendor. In summary, if a consignee needs an individual declaration form, or individual Customs invoice, the shipment is classified as category "D" regardless of its value.




Document Requirements
  Import Documentation

The following are some basic clearance documents. Please note that different declared values, commodities, and types of trade may require additional documents not noted below.

  1. Commercial Invoice: A Commercial Invoice is required for all non-document shipments. A specific format is not required, although the following basic information must be included:
    • The shipper's and consignee's name and address and telephone number¬†
    • The place and date of shipment
    • A detailed description of the goods
    • Harmonized code of shipment
    • The FOB value of each item
    • The country of origin
    • The quantity and weight
    • Currency used
    • Freight and Insurance Charges as applicable

      PLEASE NOTE:  ELECTRONIC INVOICES (ECI) ARE NOT ACCEPTED.

  2. Pro Forma Invoice: A Pro Forma Invoice is permissible for customs clearance of non-trade shipments, with no commercial value.
  3. Air Waybill: The following information must be included: name, telephone number, address of the shipper and the consignee, description of goods, harmonized code, cif value, weight, number of packages and the date. All information must be written in English and consistent with that of the shipment's other documentation.
  4. Packing List: A Packing List is required for all non-document shipments. The following information should be included: place and date of shipment, order number, description of goods, number and type of packaging, weight, marks and numbers on the packages (if any).
  5. Certificate of Origin: A Certificate of Origin is required for non-document shipments. The certificate has a specified format. The information supplied should be consistent with that of  the shipment's other documentation. When required, two copies should be provided.



Customs Valuation
 

According to Chinese Customs regulations, the dutiable value of an imported good is its CIF price, which includes the normal transaction price of the good, plus the cost of packing, freight, insurance, and seller's commission. In August 1998, the Customs Administration launched an ambitious program to standardize enforcement of customs regulations throughout China as part of a larger campaign to combat smuggling. The program has reduced some of the flexibility of local customs officials to "negotiate" duties. However, customs officials still have wide discretion concerning the category in which an import is placed.

Customs regulations state that Customs has the authority to inspect all shipments and if customs finds a discrepancy with a declared value, weight or number of packages, Customs may detain and inspect the shipment. If Customs finds a violation of their laws and regulations, the owner of the goods may be fined.

In addition, Customs has the right to re-evaluate an importation if  the declared value is obviously lower than the price of  the same or a similar commodity in the local market or in the international market place, or there is evidence that the seller and the buyer have conducted private transactions and the consignee cannot provide reasonable or legal supporting evidence of  the commodity's true value.




Import Duties
Import Taxes Import taxes mean consists of import customs duty (IAD), value-added tax (VAT), and Excise duty (consumption tax, named as CT thereafter). Also there are some additional duties according to the relevant regulations.

Import Duty Rate

Import duty rates are divided into three classifications: Most Favored Nation (M.F.N.) Asia-Pacific Trade Treaty rates (Former Bangkok  Agreement (BA) Rates), and General (Gen) Rates.

The M.F.N. Rates apply to import commodities originating in the member countries or regions of  the WTO, with which China shares the General Most Favored Nation treatment. It applies to import commodities originating in countries or regions with which China has concluded reciprocal tariff preferential agreements.

Tax Rates in Asia-Pacific Trade Treaty ( The former Bangkok  Agreement Rates) apply to import commodities originating in countries or regions with which China has taken part in the regional trade agreements containing tariff preferential clauses. The complementary tariff preferential clauses according to this treaty will come into effect from July 1st, 2006. So far, the contract countries include Korea, India, Sri Lanka, Laos, Bangladesh and China. 

The General Rate is applied to commodities originating in and imported from countries with which China does not have a reciprocal agreement. In addition, the General Rate is applied in the following circumstances:

  1. To commodities shipped in unmarked packaging or  whose origin cannot be determined, unless the importer can present an appropriate Certificate of Origin at time of Customs clearance.



Antidumping

Under strict enforcement of unfair trade laws, Customs will assess antidumping duties or countervailing duties. Antidumping duties are assessed on imported merchandise sold in China at less than the normal price of goods in the manufacturer's home market (also called fair market value).



Excise Duties
Excise duty (consumption tax) is imposed on tobacco products, liquor, wine, petroleum products, cosmetics, perfumes, shampoo, fireworks, jewelry, motorcycles, automobiles, and automobile tires.

Additional Duties
  1. Specific Duty - imposed on a few special commodities (broiler, beer, petroleum products, crude oil and film). In these cases, Customs uses a quantity-based method to levy the duty and taxes. For example, the duty and taxes levied for beer and petroleum products is based on liters of beer and tons of crude oil rather than on their value.
  2. Compound Duty - imposed on a few special commodities (video tape recorders, videotape reproducers, television cameras, video camera recorders, and cameras with digital image storage.
  3. Interim Duty - impose an interim or temporary tax where duty is imposed on some commodities.
  4. Special Duty --- imposed on any commodities to effectively control the import and export of certain commodities.
  5. Tonnage Dues --- imposed on foreign vessels anchoring at China ports to collect funds for the seaway construction. For more information contact the Customs General Administration of the P.R.C. at www.customs.gov.cn
Personal Effects of entry passengers and personal posted commodities are subject to a special duty and tax rate if they are not of a reasonable quantity.

  1. Tobacco, manufactured tobacco substitutes, spirits and wine are subject to a duty rate of 50%.
  2. Textiles and textile articles, cosmetics, cameras, bicycles, watches and clocks (including their parts and accessories), video cameras, video recorders, digital cameras, and other electric appliances are subject to a duty rate of 20%.
  3. Books, magazines, slides, magnetic tapes, videotapes, gold and silver and their products, food, beverages, and other commodities not mentioned above are subject to a duty rate of 10%. For further information, contact the Customs General Administration of the P.R.C at www.customs.gov.cn.



Additional Duties
Service charge Service charge is 3% of the Cost Insurance and Freight (CIF) Value.

A service charge may be applied to:

  1. Reduction of duty or duty free equipment imported by enterprises for technique promotions.
  2. Special duty free equipment used for teaching or research purpose by research institutes or schools.
  3. Reduction of duty or duty free shipments imported by a domestic organizational or industry who use a loan provided by a foreign government or by an international financial organization.
  4. Duty free equipment or machines under processing or compensation trade.
  5. Duty free commodities imported by industries or organizations in economic development  zones, special economic zones, High-Tech Industrial Development Zone and the coastland cities.
  6. Temporary duty free material, supplements, accessories, parts and packing materials used under the processing of imported (supplied) materials or other materials supplied by foreign merchants, which will be re-exported after domestic processing or assembling.
  7. Duty free fuel, accessory, parts and other commodities used for international shipping or  for airlines.
  8. Bonded or consigned duty-free commodities.
  9. Other duty free commodities designated by the State Council.
  10. Temporary duty free commodities designated by the Customs and the State Council.
Following shipments will be free from the service charges:

  1. Duty free shipments according to the Customs Laws of the People's Republic of China (P.R.C.) and the Regulations on Import and Export Tariff.
  2. Donated aids by foreign governments and international organizations.
  3. Aids or gifts donated by foreign organizations, foreign individuals, overseas Chinese, and Chinese from Taiwan, Macao and Hong Kong.
  4. Aids donated to the disaster stricken areas.
  5. Commodities or equipment imported for the handicapped.
  6. Office appliances imported by foreign embassies.
  7. Commodities damaged prior to customs release and treated as duty free commodities.
  8. Duty free compensatory commodities.
  9. The service charge is lower than 10 CNY. 
  10. Commodities re-exported within 30 days and without further processing.
  11. Other duty-free commodities designated by the Customs and the State Council.



Import Taxes
 

On top of normal tariff duties, both foreign and domestic enterprises pay either value-added taxes (VAT) or business taxes, depending on the nature of their business and the type of products involved. VAT applies to enterprises engaged in import-export, production, distribution or retailing activities.

China offers a comprehensive program of tax incentives and concessions. The general VAT rate is 17% but necessities, such as agricultural and utility items, are taxed at 13%. Enterprises regarded as small businesses (annual production sales of less than CNY 1 million or annual wholesale or retail sales of less than CNY 1.8 million) are subject to VAT at the rate of 6%. Unlike other VAT payers, small businesses are not entitled to claim input tax credits for VAT paid on their purchases. Different standards apply regarding VAT rebates. The applicable rebate method is a function of the establishment date of the enterprise. Certain limited categories of goods are exempt from VAT.




Customs Fees
Overdue Payment Fine According to the Customs Law of the P.R.C., an overdue payment fine will be imposed on the importer if the importer fails to pay the import duties and taxes within 15 days after receiving the Duty and Tax Payment Notice. An overdue payment fine will also be levied on importers of duty free or bonded shipments if the importer fails to pay the service charge within 7 days after receiving the Service Charge Payment Notice. The overdue payment fine is calculated as follows:

Total Overdue Payment Fine = Duty and Tax Amount  X  5%  X  Overdue Days

Total Overdue Payment Fine (service charge) = Service charge amount  X 1% X Overdue Days

Note:

  1. Personal effects are not subject to overdue payment fine.
  2. The overdue payment fine is exempted if it is less than 50CNY.
  3. The overdue payment fine of the service charge is exempted if it is less than 10 CNY.
 

Overdue Declaration Fine

According to the Customs Law of the P.R.C., the importer must declare to Customs within 14 days after the arrival of the import shipment. Otherwise, an  Overdue Declaration Fine will be imposed on the importer. The Overdue Declaration Fine is calculated as follows:

Total Overdue Declaration Fine = Declared Value  X  5%  X  Overdue Days

Note:

  1. The Overdue Declaration Fine is exempted if it is less than 50CNY.



Exchange Controls
Foreign currencies are banned from circulation in China
  1. The government controls payment for importations and exportations
  2. The government controls the exchange rate
  3. The unauthorized carrying or mailing of foreign exchange deposit certificates and foreign exchange securities is illegal without the permission of the State Administration of Foreign Exchange. Further information regarding these regulations can be obtained from Ministry of Commerce www.mofcom.gov.cn or from the State Administration of Foreign Exchange at www.safe.gov.cn.
The exporter must apply to the State Administration of Foreign Exchange for a Foreign Exchange Verification and Cancellation Form if the commodity is exported under the following Customs Regulatory Codes:

General Trade (0110), Barter Trade (0130), Processing of Materials Supplied by Foreign Clients (0214), Finely Processing of Materials Supplied by Foreign Clients (0255), Compensation Trade (0513), Processing with Imported Materials (0615), Finely Processing with Imported Materials (0654), Samples and Advertising Materials Category A (3010), Foreign Contract Export (3422), Authorized Military Equipment (3910), Unauthorized Military Equipment (3939), Small Quantity Frontier Trade (4019), Small Quantity Trade with Taiwan (4039), Return Shipments (4561), Re-export of Processed Imported Materials or Products (0664), Replacement of Imported Materials or Products (0700), Imported Material of Nonreciprocal Contract (0715), Re-export of Off cut from Imported Material (0864), Direct Trade with Taiwan (1110), Bonded Factory (1215), Export Material for Processing (1427), Renting Trade Shipment less than One Year (1500), Renting Trade (1523), Consignment Trade (1616),Processing of Imported Materials by Foreign Invested Enterprises (2215), and Tourist Shipments (0139).

Commodities that are not covered by the above two requirements are not subject to the Foreign Exchange Verification and Cancellation Form.



Technical Barriers to Trade (TBT's)
Technical barriers or non-tariff  barriers to trade, as they are sometimes known, can cause many problems for exporters looking for new markets for their products. These barriers can be in the form of regulations, standards, testing and certification procedures. The World Trade Organization (WTO) Agreement on Technical Barriers to Trade tries to ensure that these barriers do not create unnecessary obstacles. To obtain further information on Technical Barriers to Trade as well as Notifications on Technical Regulations and Conformity Assessment Procedures, go to the WTO website at http://www.wto.org/english/tratop_e/tbt_e/tbt_e.htm.



Consular Fees
 

NONE



Import Clearance Process
 

FedEx import shipments go through the following steps for Customs clearance:

  1. FedEx manifests shipment  data via EDI to Customs for preclearance
  2. Customs feedback as to whether the shipment will be released, inspected, levy duty and tax or will require a formal entry
  3. FedEx contacts the consignee for clearance paperwork and for the duty and tax payment
  4. FedEx submit the required paperwork to Customs for clearance
  5. Customs releases the shipments for delivery

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