The State Council has recently introduced a series of new measures
to tighten its control on processing trade activities. Document No.
35 "Opinion on further improving the Bank Guarantee Deposit
System for the Processing Trade Enterprises
" means that, as
from 1 October 1999, various measures will be implemented with the
aim of providing a conducive environment for legitimate processing
enterprises to prosper, while stamping out illegal activities such
as smuggling, tax and foreign exchange evasion.
The new measures will categorise processing
enterprises and goods imported for processing. Enterprises will be
categorised on the basis of their management efficiency and record
of compliance with customs regulations. Goods will be classified
into three categories: prohibited, restricted and permitted goods.
Enterprises will be required to make security deposits equivalent
to the sum of the import duty and VAT on restricted goods which are
imported for processing. However, enterprises may find that the
restrictions are eased if they fall within the various categories
indicating good management efficiency and compliance records. Other
measures also tighten controls on factory transfers and processing
trade activities involving different customs jurisdictions. These
measures put into place on a nationwide basis the "Measures to
control the processing trade involving materials transferred
between factories and across customs territories" regulations which
were trialed in Guangdong and Fujian provinces in April.
Aili Zhao, +86 10 6590 0389,