China Roundup: Increased de Minimis, New Medical Device Inspections and Customs Updates

China overhauled its e-commerce regulations in recent months, upping its de minimis level and adding new responsibilities for logistics providers and foreign suppliers, and also adopted new regulations on foreign medical device facility inspections. Meanwhile, China's General Administration of Customs has recently set new requirements for bonded zones and set lower value-added tax rates for some products. The following is an update on recent customs and trade-related actions by China:

China Raises de Minimis Limit, Sets New Reporting Requirements for Logistics Providers, Sellers

China made a series of changes to its rules on e-commerce, including an increase to the value of goods that are permitted for duty-free imports, from $300 daily and $3,000 annually to $750 daily and $3,900 annually, according to reports by Sandler, Travis & Rosenberg and KPMG. The list of goods eligible for e-commerce was expanded, and e-commerce orders may now be fulfilled from free-trade zones, PwC Worldtrade Management Services said in its alert. On the other hand, the new regulations tighten restrictions on redistribution by so-called grey market channels, called "Daigou." Logistics providers must now suspend delivery and report to customs any orders where the recipient’s address is different from the address declared on the customs clearance documents, and foreign sellers now "have an affirmative obligation to report violations to customs and cooperate in any investigation of suspected redistribution," PwC said. "Customs has been specifically granted enforcement powers against all of these entities, including the foreign sellers." The changes took effect Jan. 1.

Foreign Drug, Device Facilities Subject to Inspection by Chinese Agency

China issued new regulations on Dec. 26 making drugs and medical devices exported to China subject to inspection by the National Medical Products Administration, according to an alert from CMS Law. The inspection will examine the “overseas process of development and production” of the drugs and medical devices to ensure their “authenticity, reliability and compliance,” the report said, adding that NMPA will be “responsible for administration of overseas inspection.” Facilities that don't get the required documents together in time will be deemed "unaccepted," so "it is advisable to prepare in advance the documentations based on the List of Site Master Files which may be required by the overseas inspection of NMPA," the alert said. "If the drugs and medicals devices have already been imported in China, it is also suggested to prepare as from now all the documents as required based on the List of Site Master Files to save time in case of sudden inspection of NMPA."

More Activities, New VAT Treatment Coming for Comprehensive Bonded Zones

China published a draft of opinions for promoting its comprehensive bonded zones, which allow goods to enter through certain customs supervision areas free from duties, according to a Feb. 28 report by KPMG. In the draft, China said it aims to extend the focus of CBZs from export functions to broader areas of business and trade, including research, development, innovation, testing and sales services, KPMG said. In addition, the draft states that value-added-tax (VAT) "general" taxpayer status would be granted to companies in CBZs, KPMG said. China would also exempt domestic sales of cell phones and car parts manufactured in CBZs; goods imported into CBZs for research and development would be exempted from import license requirements; bondage storage and display of cars in CBZs would be allowed at certain automobile import ports; and certain registered companies can declare imported and exported “large-scale equipment” to CBZ customs without the equipment entering the zone, according to KPMG.

China Customs Updates Regs and Policies on Bonded Zones, VAT Exemptions

China's General Administration of Customs recently made a series of changes related to imports into customs bonded zones, and also set lower VAT rates and exemptions for drugs imported for rare diseases, according to KPMG China's customs updates covering the months of January and February. Highlights of the KPMG reports are as follows:

Dangerous goods. Chinese Customs updated its requirements for manufacturer codes of packages for “exported dangerous goods,” according to KPMG, requiring that packages carry “(United Nations)-stipulated marks that contain the codes of the manufacturers.” The change took effect Jan. 10.

Temporary imports and exports. China Customs on Jan. 9 announced it has “extended the acceptance” of ATA carnets for professional equipment under Istanbul Convention Annex B.2 and containers, pallets, packagings and samples under Annex B.3, except for certain goods of Annex B.3. "Customs formalities shall be gone through for temporarily imported containers, container-oriented accessories and equipment, and spare parts for repairing containers," KPMG said. For temporary imports not under an ATA carnet are transferred to an area under special customs supervision or a supervised bonded area, China Customs "shall perform verification and write-off for the goods against the export customs declaration, KPMG said.

Customs declaration instructions. China customs revised its instructions for completing customs declaration forms for import and export goods, KPMG said. The changes took effect Feb. 1.

New royalty customs mode. China Customs announced a new “deferred royalty duty collection” customs supervision mode starting March 1, KPMG said. The new code 9500 is “applicable to royalties paid by duty payers after importation.” “After paying royalties and within a specified period, the duty payers shall make duty payments to the Customs,” according to KPMG.

Shenzhen Customs. Shenzhen Customs revised its announcement on “launching the bonded exhibition transactions service” on Jan. 11, according to KPMG. The change made several revisions, including specifying that “bonded exhibition transactions” refer to activities carried out by entities under “special supervision” by Customs “to exhibit and sell the bonded goods transferred under guarantee out of the areas.” Customs also revised the announcement for the “one-time declaration for multiple inbound/outbound shipments service, KPMG said. The change specified that permits required for goods involved in one-time declarations for “multiple inbound/outbound shipments” must go through Chinese Customs “formalities such as online permit verification."

Drugs for rare diseases. The Chinese Ministry of Finance announced that any VAT payer who "produces, sells, wholesales or retails drugs registered with NMPA" may pay VAT "using the simple method" at 3 percent, KPMG said. Imported drugs for rare diseases are eligible for the lowered VAT rate, it said. The change took effect March 1.

VAT exemptions for agricultural goods. The Chinese Customs Tariff Commission of the State Council on Feb. 11 announced "imported seeds (seedlings), breeding stock (poultry), fingerlings (fry), and the provenance of wild animals and plants for breeding" continue to be exempt from import VAT "during the period of the 13th Five-Year Plan," KPMG said.

Comprehensive bonded zones. China Customs announced regulatory reforms related to comprehensive bonded zones, calling the reforms "four self-services and one simplification," according to KPMG. The reform includes the ability for "self-registration, self-determined reasonable verification and cancellation cycle, self-verification and declaration, self-paying taxes, and simplification of customs procedures," KPMG said. The reforms will be applied to entities who are approved by Customs and classified as "regular credit enterprises." The announcement took effect Feb. 1.

CBZ food imports. China Customs issued new regulations on Feb. 2 adopting a “clearance after sample checking” model for goods imported into customs bonded zones. According to KPMG, the new rules say foods that will subsequently be imported into the domestic market from the CBZ are subject to examination within the CBZ before clearance. If laboratory testing is deemed necessary, foods may be cleared after samples are taken if the importer pledges to comply with Chinese food safety standards and has implemented a complete recordkeeping system for food importation and sales. If the imported food is then found unsafe or unhygienic after the laboratory testing, the importer will have to recall them “and undertake corresponding liability.”

CBZ animal and plant imports. China announced new regulations Feb. 27 on procedures for animals and plant products imported into CBZs, KPMG said. After completing quarantine procedures at ports of entry, animals and plants may then enter customs supervised warehouses in CBZs, where sample testing and examinations will be conducted.

Beijing: Customs classification platform. A new platform for information on customs classification from Beijing Customs is now live, KPMG said. The Beijing Customs Classification System includes a module on historical classification messages at the Beijing port of entry; a tariff schedule search module; and an “other search” module containing information on “national key commodities, tariff annotations, national subheading annotations, commodity classification decisions, and administrative rulings on commodity classification,” it said.