This English translation is for reference only. The Chinese version shall prevail in case of any inconsistencies.

Notice on the Import and Export Tax Policy Regarding Goods Entering and Leaving the Guangdong-Macao In-Depth Cooperation Zone in Hengqin

(No. 1 [2024] of the Ministry of Finance, the General Adminstration of Customs, and the State of Taxation Administration)

The Department of Finance of Guangdong Province, the Guangdong Regulatory Bureau of the Ministry of Finance, the Guangdong Sub-administration of the General Administration of Customs, the Gongbei Customs, the Guangdong Provincial Tax Service of the State Taxation Administration, the Office of the Commissioner of the State Taxation Administration in Guangzhou:

To implement the Master Plan for the Construction of Guangdong Macao In-Depth Cooperation Zone in Hengqin, after approval by the State Council, it is hereby notified that the import and export tax policy regarding goods entering and leaving the Guangdong-Macao In-Depth Cooperation Zone in Hengqin (hereinafter referred to as the “Cooperation Zone”) will be carried out as follows.

I. The boundary between Hengqin and the Macao Special Administrative Region (hereinafter referred to as “Macao”) is designated as the “first-line”. Goods going between the Cooperation Zone and Macao through the “first-line” (excluding transit goods passing through the Cooperation Zone) shall register with the Customs and be subject to the Customs supervision and control. Except for those clearly stipulated by state laws and administrative regulations as goods not exempted from tax or not bonded, goods entering the Cooperation Zone through the “first-line” shall comply with the following provisions:

1. Machinery, equipment (excluding aircrafts, automobiles, ships and yachts and other means of transport), molds, the spare parts of the above-mentioned goods, and capital project materials (excluding materials for interior decoration and furnishing) imported for own use by enterprises registered in the Cooperation Zone with independent legal entity status (hereinafter referred to as “enterprises in the Cooperation Zone”), administrative organs, public institutions and statutory bodies in the Cooperation Zone, as well as social groups and non-enterprise private units registered in the Cooperation Zone are eligible for exemption of import duties, import value-added tax (VAT) and consumption tax. The scope of machinery, equipment, molds, and their spare parts eligible for duty-free importation through the “first-line” is specified in Attachment 1.

2. Except for those set forth in the paragraph (a) above, other goods imported by entities in the Cooperation Zone shall be bonded.

3. Entities importing the tax-exempt goods set forth in the paragraph (a) of this article may apply to the Gongbei Customs for voluntary payment of import duties, import value-added tax (VAT) and consumption tax. Entities that have voluntarily waived their tax-exempt status shall not apply for tax exemption again within 36 months.

4. The list of entities eligible for tax-exempt importation shall be decided and subject to dynamic adjustment by the Executive Committee of the Cooperation Zone together with the Gongbei Customs and other relevant departments, and a copy thereof shall be sent to the Ministry of Finance, the General Administration of Customs and the State Taxation Administration.

5. The tax-exempt goods entering the Cooperation Zone through the “first-line” shall be subject to a supervision period with reference to the supervision period of import goods entitled to duty reduction or exemption. Where tax-exempt goods, before the expiration of their supervision period, apply for early lifting of supervision or being transferred to other entities than those eligible for tax-exempt importation in the Cooperation Zone, their import duties, import value-added tax (VAT) and consumption tax shall be duly paid in accordance with relevant regulations on import goods entitled to duty reduction or exemption.

II. Entities in the Cooperation Zone shall, before selling duty-free or bonded goods and their processed finished products to individuals, complete the Customs formalities in accordance with relevant regulations on import goods and pay the import duties, import value-added tax (VAT) and consumption tax to the Customs based on the actual inspection declaration status. Domestic VAT and consumption taxes shall be collected in accordance with relevant provisions. The bonded goods and their processed finished products may be circulated on a bonded basis among entities in the Cooperation Zone in accordance with relevant regulations.

III. The boundary between Hengqin and other parts of the Customs territory of the People’s Republic of China (hereinafter referred to as “the Chinese mainland”) is designated as the “second-line”. Duty-free or bonded goods and their processed finished products entering the Chinese mainland through the “second-line” shall complete the Customs formalities in accordance with relevant regulations on import goods. For those goods sold domestically, the import duties, import value-added tax (VAT) and consumption tax shall be collected based on their actual inspection declaration status, and the policy of selective tariffs is not applicable. For those goods entering the Chinese mainland through the “second-line”, where the payment of duties, VAT and consumption taxes has been completed in the “first-line” as required or in the Cooperation Zone, no more import taxes and duties will be levied.

IV. Goods that contain imported materials and parts and have been processed to achieve an added value of up to or more than 30% over the original value, when entering the Chinese mainland from the Cooperation Zone, are eligible for the exemption of import duties but shall pay the import value-added tax (VAT) and consumption tax in accordance with relevant regulations. The value-added rate of processing shall be calculated by the provisional formula in Attachment 2. This article shall not apply to goods that have only undergone minor processing or treatment and those subject to import duties according to relevant provisions.

V. For goods imported through the “first-line” by entities in the Cooperation Zone subject to tariff quota management, trade remedy measures, the suspension of tariff concession obligations and the enforcement of additional tariffs, and the levying of retaliatory tariffs (except for the exclusions from the first and second batches of U.S. products imposed with additional tariffs and within the valid exclusion period) (hereinafter referred to as the “goods subject to four types of measures”), shall be treated under the bonded policy only.

1. If the bonded imported goods or their processed finished products are specified as goods subject to four categories of measures, the provisions in Article 4 of this Notice do not apply, and such goods and products shall not be involved in any consigned processing business.

2. The imported materials in the Cooperation Zone that are specified as goods subject to four types of measures shall not be circulated on a bonded basis after processing. The unprocessed goods subject to four categories of measures may be entitled to bonded circulation; for their processed finished products sold to individuals or entering the Chinese mainland through the “second-line” for domestic sale, the provisions in Articles 2 and 3 of this Notice do not apply. Such processed finished products shall be subject to import duties and relevant measures based on the corresponding materials, and shall pay the import value-added tax (VAT) and consumption tax in accordance with their actual inspection declaration status.

3. If the imported materials and parts in the Cooperation Zone are not specified as goods subject to four typesof measures, but their processed finished products are specified as goods subject to four categories of measures and are to be sold to individuals or to enter the Chinese mainland through the “second-line” for domestic sale, import duties, VAT and consumption taxes, and other relevant measures shall be imposed in accordance with the actual inspection declaration status of the goods.

VI. Goods entering the Cooperation Zone from the Chinese mainland through the “second-line” shall be deemed exports and subject to VAT and consumption tax refunds. In regard to the dutiable goods for export, export duties shall be collected; export declaration and other Customs formalities shall be completed as required; duty-free and bonded supervision measures shall be carried out with reference to the provisions in Article 1 of this Notice; and relevant import and export tax policies shall apply. For the goods where export duties have been paid upon entering the Cooperation Zone through the “second-line”, export duties shall be exempted when they are transported out of the Customs territory of the People’s Republic of China through the “first-line”. The policies on VAT and consumption taxes for export goods shall be implemented in accordance with relevant provisions.

VII. Any of the acts of evasion of taxes payable in violation of provisions of this Notice that constitutes an act of smuggling or a violation of the Customs supervision and control regulations shall be dealt with by the Customs and other regulatory bodies in accordance with relevant regulations. If a crime is constituted, criminal responsibility shall be investigated in accordance with the law. The Executive Committee of the Cooperation Zone shall formulate supporting administrative measures of this Notice and strengthen supervision and control in accordance with its responsibilities.

VIII. The Guangdong Regulatory Bureau of the Ministry of Finance, the Guangdong Sub-administration of the General Administration of Customs, and the Guangdong Provincial Tax Service of the State Taxation Administration shall strengthen the supervision and inspection of the implementation of fiscal and tax policies in the Cooperation Zone to avoid illegal activities and other misconducts. Major incidents shall be reported to the Ministry of Finance, the General Administration of Customs and the State Taxation Administration in a timely manner.

IX. Without prejudice to the relative stability of the current policies, the Ministry of Finance shall, together with General Administration of Customs and other relevant departments, adjust the scope of duty-free and bonded goods and that of entities eligible for tax-exempt importation when necessary.

X. From the start of the implementation of this policy, the Executive Committee of the Cooperation Zone shall evaluate the effect of the policy in a due and timely fashion and report relevant information to the Ministry of Finance, the General Administration of Customs and the State Taxation Administration on a regular basis, including information about the entities eligible for this policy, the scope of duty-free and bonded goods, and the import and export data.

XI. This Notice shall take effect from the date from the date of the start of the special customs operation in the Cooperation Zone after the completion and acceptance of relevant facilities. The Notice by the Ministry of Finance, the General Administration of Customs and the State Taxation Administration on the Import Tax Policy Regarding Hengqin Development (No. 17 [2013] of the Ministry of Finance, the General Adminstration of Customs, and the State of Taxation Administration) will be simultaneously repealed.

XII. Matters not specified in this Notice shall be handled in accordance with existing provisions, if any, and current relevant regulations.

Attachments: 1. Scope of Machinery, Equipment, Molds, and Their Spare Parts Eligible for Duty-free Importation Through the “First-line” of the Guangdong-Macao In-depth Cooperation Zone in Hengqin

2. Formula to Calculate the Value-added Rate of Processing Under the Duty-free Policy

Ministry of Finance  General Administration of Customs  State Taxation Administration

January 3, 2024

Attachment 1:

Scope of Machinery, Equipment, Molds, and Their Spare Parts Eligible for Duty-free Importation Through the “First-line” of the Guangdong-MacaoIn-depth Cooperation Zone in Hengqin

Machinery, equipment (excluding aircrafts, automobiles, ships and yachts and other means of transport), molds and the spare parts of the above-mentioned goods, as well as commodities specified in Chapters 84, 85, 90 and items under the subparagraph 9508 of Chapter 95 of the Import and Export Tariff Schedule of the People’s Republic of China (2023) are eligible for duty-free importation through the “first-line” of the Cooperation Zone, except for the items in the list of non-tax-exempt commodities entering the Cooperation Zone through the “first-line”.The items in the list of non-tax-exempt commodities entering the Cooperation Zone through the “first-line” are entitled to the bonded policy. The full list is as follows.

List of Non-tax-exempt Commodities Entering the Cooperation Zone Through the “First-line”

Notes:

1. The commodity codes correspond to the HS (Harmonized System)-based China Customs commodity codes in the Import and Export Tariff Schedule of the People’s Republic of China (2023). 

2. The commodity names are for reference only. For the full scope of commodities, please refer to the commodity descriptions under the corresponding commodity codes in the Import and Export Tariff Schedule of the People’s Republic of China (2023). 

Attachment 2:

The calculation formula of the policy of exempting the added value from processing from tariffs

The calculation formula: 〔(Price for the sale of goods in a domestic area outside of the Cooperation Zone－Σ price of materials and parts imported from abroad－Σ price of materials and parts purchased in the domestic area outside of the Cooperation Zone) / (Σ price of materials and parts imported from abroad＋Σ price of materials and parts purchased from the domestic area outside of the Cooperation Zone)〕×100%≥30%