中华人民共和国海关对外商投资企业进出口货物监管和征免税办法 Measures of the Peoples Republic of China on Control over and Taxation

Customs. The term is counted from the day the tax-free imported goods are given customs clearance.

　　Term of imported goods enjoying preferential tax free treatment are as follows：

　　（1） ships， air crafts and building materials （including rolled steel， timber， plywood， artificial board and glass） for 8 years

　　（2） motor-driven vehicles and house-hold electrical appliances for 6 years

　　（3） machinery， equipment and other materials for 5 years

　　For tax-reduced and exempted goods that exceed the term of customs supervision and control， the enterprise may apply to Customs to lift supervision and control. Upon ratification， the Customs in charge shall issue a“ Certificate of the Customs of t e People's Republic of China on Lifting Supervision and Control over Tax-Reduced and Exempted Imported Goods of a Foreign-funded Enterprise”。

　　For the tax reduction and exemption of imported goods within the term of customs supervision and control which are resold or sold in China upon the approval of the original examination and approval department， the Customs shall make an appraisal of depreciation according to the time of use of these goods and re-levy the import duties.

　　With regard to tax-reduced or exempted imported goods not included inthe term of customs supervision and control， Customs shall make a price appraisal according to the use of the goods and re-collect the import duties.

　　Article 19 A reasonable amount of catalytic agents， grinding materials and fuel consumed in production which are imported by the foreign-funded enterprise in order to perform the product export contract and are directly used in processing export products shall be exempted from import duties and industrial and commercial consolidated tax.

　　Article 20 When by-products， substandard products， and leftover industrial surplus generated in the process of production are converted to domestic sales by the foreign-funded enterprise in order to perform the product export contract， after being verified and according to the circumstances. Wastes proved really worthless

can be exempted from repayment tax.

　　Materials imported by a foreign-funded enterprise for trial run shall be levied on duties according to regulations when they are imported.

　　Article 21 Materials and parts imported by a foreign-funded enterprise for processing products for domestic sales， with the approval of the economic and trade department in charge， shall be levied on duties when they are imported.

　　Article 22 Products produced by the foreign-funded enterprise for export， except those commodities which are restricted for export or except there are separate provisions of the State， are exempted from export duties.

　　Chapter 4 Management， Verification and Cancellation of Bonded Im- ported Materials and Parts

　　Article 23 Enterprises with foreign investment shall set up special account books meeting all customs requirements and state in form of the import， storage， drawing， using and processing at another factory of bonded imported materials and parts （hereinafter referred to as materials and parts）， as well as the storage， export and internal sales of processed products， and regularly report them to Customs for verification.

　　Article 24 Materials and parts imported by an enterprise with foreign investment shall be， except due to special reasons and with the approval of Customs， processed to finished products to perform related export contracts within 1 year from the date of imported.

　　When imported materials， parts and processed products are changed to internal sales for some reasons， the foreign-funded enterprise shall have the approval of the economy and trade department concerned， and repay duties and the industrial and commercial consolidated tax on the imported materials and parts before they are allowed to be sold in the domestic market. For materials and parts under license management， the import licenses shall be submitted for check.

　　Article 25 Materials and parts imported by foreign- funded enterprise are not allowed to be processed directly at another factory. If they have to be processed at another factory due to special circumstances， the foreign-funded enterprise shall report to Customs in advance for approval. Within the term of the customs approval， the finished and semi-finished products processed at another factory must be transferred to the original enterprise. When a foreign-funded enterprise's imported materials and parts processed into finished or semi-finished products are not directly exported， but instead are sold or transferred to another processing and exporting enterprise for re-processing and assembling， the enterprise with the imported materials and parts shall， together with the original enterprise， bring with them the purchasing and sale contract， or production and processing contracts and other related documents signed by both parties to Customs to perform the carry-over， verification and writing off procedures.

　　Article 26 For materials and parts under an import contract， a foreign-funded enterprise must， within 1 month from the day of the export of the last batch of finished products， bring in the “Registration Handbook” and the declaration of export goods and other related documents to the Customs to perform the verification and writing off procedures.

　　Article 27 After a foreign-funded enterprise imports materials and parts， if there are changes， transfer and termination of the contract， it shall immediately perform relevant procedures at Customs.

　　Chapter 5 Mortgage， Bankruptcy and Liquidation

　　Article 28 When a foreign-funded enterprise uses goods under customs supervision and control as a loan mortgage to domestic and foreign financial institutions， it shall apply in advance to the customs department in charge and perform mortgage procedures upon approval.

　　When the above-mentioned collaterals are being actually handled， the enterprise shall depreciate them according to

their used years， repay duties and complete the customs procedures.

　　Article 29 When a foreign-funded enterprise terminates or cancels a contract， it shall， within 15 days from the date of approval of liquidation by examination and approval department， or within 15 days from the date of enforcement of the bankruptcy is decided by the court， bring with it duplicates of the documents of ratification issued by the examination and approval organization， detailed statements of the duty levy or exemption on imported materials， the “Tax Levy or Exemption Certificates” and the“ Registration Handbooks” issued by Customs， to apply to the customs in charge and perform the procedures for cancelling the tax reduction and exemption on imported materials. The enterprise shall return the “Customs Declaration Registration Certificates”， the “Declarant Certificates” and other related certificates.

　　Before Customs completes the procedures for cancelling the case of the above-mentioned enterprises duty reduction and exemption of imported materials， it shall seal the related imported materials for safekeeping.

　　Article 30 Before a bankrupt foreign-funded enterprise clears off its property， it shall perform the procedures of paying duties for the supervised and managed goods enjoying preferential customs duty treatment according to State regulations.

　　Article 31 With regard to the duty reduction or exemption of imported goods of a foreign-funded enterprise which terminates or cancels a contract within the term of customs supervision and control， Customs shall handle the goods according to the following provisions：

　　（1） when the imported goods are left to the Chinese partner of the joint venture for its continued use， or transferred or sold to domestic units， Customs shall depreciate and re-levy duties on them according to the duration of their usage；

　　（2） imported goods transferred to another domestic foreign-funded enterprise enjoying equal preferential treatment， after approval of the examination and approval department and completion of the carry-over procedures at Customs， can continue to have duty reduction and exemption treatment；

　　（3） upon approval from Customs， the foreign partner to a joint venture is allowed to ship the original duty- free imported goods out of China.

　　Article 32 For the above-mentioned enterprise with foreign investment which has completed customs procedures， Customs shall issue it the “Notice for the Enterprise Completing Customs Procedures”。

　　Chapter 6 Supplementary Provisions

　　Article 33 Foreign-funded enterprises set up in the special economic zones， economic and technological development areas， free trade zones， high-tech development areas， coastal open cities， coastal open areas as well as other regions practising special preferential policies， shall handle their imported and exported goods in accordance with the Measures. In addition， they shall also implement the related policies granted by the State to the foreign-funded enterprise in the above-mentioned areas.

　　Article 34 Enterprises invested by compatriots from Taiwan， Hong Kong and Macao and overseas Chinese， besides carrying out the relevant stipulations of the State Council Regulations on Encouraging Investment of Taiwan Compatriots， and the State Council Regulations on Encouraging Investment of Overseas Chinese and Hong Kong and Macao Compatriots， shall also implement the stipulations of the Measures.

　　Article 35 With regard to actions violating the Measures， Customs shall Deal with them according to the Customs Law of the People's Republic of China， and the Detailed Rules for the Implem

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