China’s New Method for Import Duty Payment

The General Administration of Customs (GAC) is a ministry-level administrative agency within the government of the People’s Republic of China. It is responsible for the collection of value added tax (VAT), customs duties, excise duties, and other indirect taxes such as air passenger duty, climate change levy, insurance premium tax, landfill tax and aggregates levy, and for managing the import and export of goods and services into China.

On July 27, 2015, the GAC announced the reform of the importation duty payment method for importers – this new method, called “Consolidated Duty Payment Method”, is applicable to imports in all ports of entry.

Current process

Currently, all imported shipments into China require documents to be completed in order to make a customs declaration. When the import declaration is approved, the importer must pay the import duty and taxes before the shipment is released by Customs. This has been the standard practice ever since China started to import shipments, and the turn-around time from the shipment arrival to the shipment release is 3-5 days depending on the accuracy and speed of document preparation and submission. In many instances, exporters to China do not take this into consideration and they then experience delays in their supply chain.

New process

The new method allows the importer to pick up the shipment prior to the payment of the duty and taxes. The importer makes the duty and tax payment within a certain time period. This is one of the most important developments within the China custom management system as it moves forward to provide a simplified and convenient trade process, significantly improving the efficiency of custom clearance ands well as reducing the customs clearance interval times.

How to apply

According to GAC Issue Number [2015] 33, importers can submit an application for Consolidated Duty Payment Method at the district custom office where the importer is registered for custom clearance. Once the application is approved, the importer must provide a deposit and a Letter of Guarantee to customs before the new process is implemented. The deposit amount is deducted every time a shipment is declared and all payments will have to be made electronically. Failure to comply with the regulations and meet the payment timeframes may result in penalties for the importer and, failing to meet the payment more than twice, the importer will not be able to use the new method.

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