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HOME > Publications > Professional Articles > Customs Reform and Enterprise Compliance (1)

Customs Reform and Enterprise Compliance (1)


What are the key areas of customs system reforms under the new customs regulatory system?

With the reform of national customs clearance integration advancing in full swing, new customs process design, system transformation and supervision system are coming. Therefore, what reforms have been carried out by the Customs around key areas and links under the new customs regulatory system? What institutional profit can enterprises get from customs reform and what are the corresponding risk points? How to deal with it? Focusing on the theme of “Customs reform and enterprise compliance”, the author will elaborate the above issues in three papers. This is the first one.

In recent years, the Customs has continued to deepen the reform of the national customs clearance integration. After customs declaration and inspection being integrated in 2018, the inspection and quarantine operation has also been included in the national customs clearance integration framework. On the basis of maintaining the “center--site” basic structure, the customs supervision system further pushes the integration of duties and functions, optimizes the operation process of customs clearance supervision, and comprehensively strengthens service convergence. In this context, the Customs around the key areas and crucial links, launched a series of system reform policies for benefit of the enterprises and convenience of people. This paper will give a brief introduction to the representative system reform in recent years.

Ⅰ. Customs Clearance Regulation

The two-step declaration system will be fully implemented. The 105 items that an enterprise needs to declare in one time in the past are now divided into two steps separately. The first step is the preliminary declaration. If the imported goods are not restricted or controlled articles and are not subject to inspection or quarantine according to the relevant law, 9 items shall be declared, and 2 items involving logistics shall be confirmed. For the restricted and controlled articles, 2 additional items shall be declared. For those that are subject to inspection or quarantine according to the relevant law, 5 more items shall be declared. For dutiable goods, the satisfactory filing numbers for guarantee shall be selected. If the goods do not need to be inspected, they can be picked up; while, if guarantee has been paid for the tax-involved goods, or the Customs has completed the inspection, they can also be picked up. The second step is complete declaration. An enterprise shall accomplish the complete declaration within prescribed time and undergo formalities for tax payment and other customs clearance procedures.

The two-stage access regulatory system will be continuously promoted. Here, the supervision system are divided into“two stages” by port clearance (the approval of the import goods to be lifted away from the port supervision site is regarded as port clearance), and the two stages are named “permitted entry” and “qualified in the market” respectively. Specifically, “permitted entry” stage regulated the followings: for material emergencies and risks difficult to control after release such as restricted and controlled articles (such as nuclear, biological, chemical, detonating, and explosive articles and drugs), major epidemics, and high-risk commodity safety, or other conditions explicitly stipulated by laws or administrative regulations. “qualified in the market” stage regulated the followings: for other risks such as non-high-risk commodity inspection and risk-controllable quarantine, the “eligibility-based marketing” regulation shall be implemented. The “qualified in the market” regulation can be combined with “permitted entry” regulation before port clearance.

The mode of customs clearance through mail and delivery will be reformed into two-type customs clearance gradually. The existing regulatory mode of mail and delivery customs clearance will be reformed, incorporating express mails of Category C into the integrated customs clearance management of goods, and promoting the integration of express mails of Category A and B. To gradually integrate the mail, express delivery and cross-border e-commerce into the national customs clearance integration, standardize the customs clearance mode uniformly for the items of mail and express delivery and the small batch and multi-batch goods, and form the two-type customs clearance mode through freight channel and delivery channel.

Ⅱ. Tax Collection

The traditional concept and mode of tax collection will be changed. The tax risk disposal of the original business site will be mainly put after the goods are released. In short, it is changed from the previous comprehensive examination of customs clearance to the “voluntarily tax declaring and payment” of enterprises and post-examination by the Customs. “voluntarily tax declaring” means that the enterprise fills in all items of the customs declaration truthfully and correctly, and submits them to the Customs after confirming the taxes payable calculated by the system. “voluntarily tax payment” means that the enterprise shall go through the tax payment formalities by itself based on the content of  “voluntarily tax declaring”. The “voluntarily tax declaring and payment” will be shown on the printed duty payment form, which ca function as tax payment voucher.

It shall be noted that in this mode, for tax collection elements, such as price, place of origin, classification, etc., the Customs tends to adopt post-examination procedure, i.e., after the goods are released, the Customs carries out selective examination on the tax elements, and if it is found that the declaration does not conform to the actual situation, the Customs will initiate the value determination and tax supplement procedure, or carry out audit and verification, or even transfer to anti-smuggling authorities for investigation and processing, etc., according to the specific condition.

Ⅲ. Follow-up Regulation

The inspection and verification will be further strengthened. In addition to the routine inspection, in order to improve the administrative efficiency, it is very likely to highlight the special inspection of key areas, fields, industries and commodities; at the same time, due to its flexibility and simplicity, the inspection means are also more and more widely used in customs regulation.

Enterprise credit management will be enhanced. In practice, the Customs will apply different management measures according to the actual credit rating of the enterprise. The general principle is to “praise honesty and punish dishonesty”. The higher the credit rating of an enterprise, the more preferential and convenient measures it enjoys. Moreover, in the new customs regulation system, the enterprise credit management system has become a more and more powerful hand for the Customs to promote the enterprise’s law-abiding operation. Many reform pilot projects and system dividends have access threshold on the enterprise credit rating. Take the application for enterprise processing trade as an example, one of the requirements for pilot enterprises is that the customs credit rating of group member enterprises shall not be lower than the average standard.

Enterprises are encouraged to abide by the law and self-discipline through fault-tolerance mechanism. Establishing the fault-tolerant mechanism of voluntarily tax declaring and payment, further improving the identification, disposal procedures and requirements of the voluntary disclosure system. To be open to the opinions of enterprises through communication and interaction, and to constantly adjust and improve the relevant policies and regulations, so as to achieve the purpose of encouraging enterprises to take the initiative to correct errors and abiding by the law and discipline themselves.

Ⅳ. Customs Special Regulatory Areas

Special regulatory areas.

There are many types of customs special regulatory areas. At present, the Customs is speeding up the integration and optimization, transforming all kinds of qualified special regulatory areas into comprehensive bonded zones. At the same time, the Customs will learn from the successful experience of the innovation system of the pilot Free Trade Zone, further optimizes the operation process of the specific regulatory area, innovates the administrative mode, and integrates the bonded function, so that it can serve the export-oriented economy and reform and opening up, connect the two markets domestic and abroad, support the innovation and development of enterprises, meet the diversified needs of industries, as well as play the intensive use of land and factor concentration and radiation. Generally speaking, enterprises in the comprehensive bonded zones will enjoy more convenient management measures and obtain more benefits in tariff, foreign exchange, trade control, operation process, etc.

Regulation of processing trade.

Since 2018, the GACC has comprehensively promoted the reform of “processing trade regulatory mode of taking each enterprise as a unit”. Under the new regulatory mode, the processing trade regulatory system based on credit management, sets the corresponding regulatory mode of taking each enterprise as a unit. Up to now, the Customs has made a series of combined efforts in simplifying and standardizing the procedures of processing trade and promoting trade facilitation. At present, the first batch of pilot enterprises’ reform of the regulatory mode of processing trade is under way.

V. New Type of Industry -- Cross-Border E-Commerce

At present, the Customs has established the regulatory mode of cross-border e-commerce retail imports. In terms of specific supervision requirements, the Customs has determined that “Cross-border e-commerce retail imports shall be subject to the supervision and administration of self-use imported goods, instead of the requirements for the approval certificate, registration or recordal of relevant goods imported for the first time”, clarified the supervision contents of the two customs clearance modes of “bonded imports purchased online” and “goods imported through direct purchasing”, and emphasized that authorities, cross-border e-commerce participants and consumers shall take their own responsibilities, and brought cross-border e-commerce related enterprises into the credit management of Customs enterprises.