Promulgation Authorities:  General Administration of Customs

Promulgation Date:  2020.12.23

Effective Date:  2021.02.01

Validity Status:  valid

Measures of the People's Republic of China Customs on Supervision of Goods under Processing Trade（Revised in 2020）

Chapter 1 General Principles

Article 1These Measures are enacted pursuant to the Customs Law of the People's Republic of China (hereinafter referred to as the "Customs Law") and other related laws and administrative regulations for the purposes of promoting healthy development of processing trade, and standardising Customs administration of goods under processing trade.   

Article 2These Measures shall apply to processing of the formalities for setting up of goods under processing trade manual, Customs declaration for imports and exports, processing, supervision, and verification and cancellation.   Processing trade business enterprises, processing enterprises, and undertakers shall be subject to Customs supervision pursuant to the provisions of these Measures.

Article 3"Processing trade" referred to in these Measures shall mean that the business activities whereby a business enterprise imports all or part of the raw and auxiliary materials, parts, components, and packaging materials (hereinafter referred to collectively as the "materials") for processing or assembly, and re-exports the finished products, including processing of supplied materials and processing of imported materials.   

Article 4Unless the State stipulates otherwise, where the imported materials under processing trade are subject to the restrictive provisions of the State on importation, the business enterprise shall be exempted from submission of import licence to the Customs.   Where the finished products exported under processing trade are subject to the restrictive provisions of the State on exportation, the business enterprise shall obtain an export permit. The Customs shall conduct system automated comparison and verification of the electronic data of the relevant export permit.

Article 5Where the imported materials under processing trade are subject to bonded supervision; upon exportation of the finished products, the Customs shall carry out verification and cancellation based on the approved actual re-exported quantity.   Where the imported materials under processing trade are subject to levying of tax at the time of importation pursuant to the provisions; upon exportation of the finished products, the Customs shall refund the levied tax based on the approved actual re-exported quantity.

Where the exports under processing trade are subject to export tariffs, the Customs shall levy export tariffs pursuant to the relevant provisions.

Article 6    The Customs shall implement guarantee system for goods under processing trade pursuant to the provisions of the State.

Goods under processing trade may be mortgaged upon approval of the Customs and completion of relevant formalities.

Article 7The Customs shall implement supervision of processing trade based on categories; the detailed administrative measures shall be formulated separately by the General Administration of Customs.   

Article 8The Customs may conduct inspection on processing trade enterprises, and the enterprises shall cooperate.   Customs inspection shall not affect normal business activities of the enterprises.

Article 9Processing trade enterprises shall, pursuant to the Accounting Law of the People's Republic of China and the relevant provisions of the Customs, set up accounts books, statements and other relevant documentation which comply with Customs regulatory requirements, record information that relates to their goods under processing trade  including storage, transfer, moving, sales, processing, use, consumption and exportation, and carry out bookkeeping and accounting based on legitimate and valid accounting vouchers.   Processing trade enterprises shall implement separate management for goods under processing trade and non-goods under processing trade. Goods under processing trade shall be stored at premises filed with the Customs, and specific materials shall be stored at designated places. For change of storage premises for goods under processing trade, the enterprise shall notify the Customs in advance, and complete filing change formalities.

Chapter 2 Setting up of Goods under Processing Trade Manual

Article 10A business enterprise shall complete the formalities for setting up of goods under processing trade manual with the Customs in charge at the location of the processing enterprise.   

Article 11Unless otherwise stipulated, a business enterprise processing the formalities for setting up of goods under processing trade  manual shall declare the trade method, unit consumption, port of import/ export, as well as commodity description, commodity code, specifications and model number, price and origin etc. of the import materials and finished products for exportation, and submit the contract entered into between the business enterprise and the foreign party. Where the business enterprise commissions processing, it shall also submit the commission processing contract entered into between the business enterprise and the processing enterprise.   Where the business enterprise has processing capacity, it shall obtain a "Processing Trade Enterprise Production Capacity Certificate" issued by the authority in charge; where the business enterprise commissions processing, it shall obtain the processing enterprise's "Processing Trade Enterprise Production Capacity Certificate" issued by the authority in charge.

Article 12Where a business enterprise has submitted complete and valid documentation and materials pursuant to the provisions of Article 11 and Article 12 of these Measures to declare for setting up of manual, the Customs shall complete processing of the formalities for setting up of processing trade manual within five working days from acceptance of the enterprise's declaration for setting up of manual.   Where there is a need to complete guarantee formalities, upon provision of guarantee issued by the business enterprise pursuant to the provisions, the Customs shall process the formalities for setting up of manual.

Article 13    Under any of the following circumstances, the Customs shall process the formalities for setting up of manual, after the business enterprise has provided security deposit equivalent to the tax payable amount, or a letter of guarantee issued by a bank or a non-bank financial institution:

(1) It is suspected of smuggling and under investigation by the Customs, and the case is not yet concluded; or

(2) The business enterprise is required by the Customs to correct its management confusion, and the correction period has not expired.

Article 14    Under any of the following circumstances, the Customs may require the business enterprise to provide a security deposit equivalent to the tax payable amount, or a letter of guarantee issued by a bank or a non-bank financial institution:

(1) Lease of factory or equipment;

(2) First-time launch of processing trade business;

(3) Two or more extension of processing trade manual;

(4) Handling of cross-locality processing trade formalities; or

(5) It is suspected of smuggling and under investigation by the Customs, and the case is not yet concluded.

Article 15Under any of the following circumstances, the processing trade enterprise shall not complete the formalities for setting up of manual:   

(1) The imported materials or the finished products to be exported are imports or exports prohibited by the State;

(2) The processing products are prohibited by the State to be processed and manufactured in China;

(3) The imported materials are not appropriate for bonded supervision;

(4) The business enterprise or the processing enterprise is not permitted to carry out processing trade pursuant to the provisions of the State; or

(5) The business enterprise which has not declared and cancelled an expired processing trade manual with the Customs within the stipulated period, makes a new declaration for setting up of manual.

Article 16    Where the declaration contents and documentation submitted by a business enterprise for setting up of goods under processing trade manual are inconsistent with the facts, the Customs shall deal with the case pursuant to the following provisions:

(1) Where the goods are yet to be imported, the Customs shall cancel the manual; or

(2) Where the goods have been imported, the enterprise shall be ordered to return the goods outside China.

Under the circumstances stipulated in item (2) of the first paragraph of this Article, the business enterprise may apply to the Customs to provide a security deposit equivalent to the tax payable amount, or a letter of guarantee issued by a bank or a non-bank financial institution, and continue to perform the contract.

Article 17A business enterprise which has completed the formalities for setting up of goods under processing trade manual may collect the sub-manual and continuation manual of the processing trade manual, from the Customs.   

Article 18Where there is any change in the contents of the goods under processing trade manual, the business enterprise shall complete change formalities within the validity period of the processing trade manual.   

Chapter 3 Importation, Exportation and Processing of Goods under processing trade

Article 19Business enterprises importing goods under processing trade may import from overseas or special Customs supervision areas or bonded supervision areas, or transfer from deep processing transit.   Business enterprises exporting goods under processing trade may export to overseas or special Customs supervision areas or bonded supervision areas, or transfer to deep processing transit.

Article 20    Goods imported and exported by business enterprises via processing trade shall be included in Customs statistics.

Article 21In the case of processing trade enterprises engaging in deep processing transit, the inward transit enterprise and the outward transit enterprise shall declare to their respective Customs in charge, to complete the formalities for actual receipt and shipment of goods and Customs declaration. The detailed administrative measures shall be formulated separately and announced by the General Administration of Customs.   Under any of the following circumstances, a processing trade enterprise shall not complete deep processing transit formalities:

(1) The processing trade enterprise failed to comply with Customs regulatory requirements and has been ordered by the Customs to make correction within a stipulated period, and the correction period has not expired;

(2) The processing trade enterprise failed to submit manual for verification within the stipulated period; or

(3) It is suspected of smuggling and under investigation by the Customs, and the case is not yet concluded.

Where a processing trade enterprise fails to receive or ship goods pursuant to the provisions of the Customs, it shall not complete deep processing transit formalities again.

Article 22    Business enterprises launching outsourced processing business shall complete filing formalities with the Customs, within three working days from outsourcing, pursuant to the relevant administrative provisions on outsourced processing.

Business enterprises launching outsourced processing business shall not resell goods under processing trade to undertakers; undertakers shall not re-outsource goods under processing trade.

Business enterprises which outsource all processes for processing shall, at the time of completing filing formalities, provide a security deposit equivalent to the tax payable amount for outsourced processing goods, or a letter of guarantee issued by a bank or non-bank financial institution, to the Customs.

Article 23For goods under processing trade such as finished products of outsourced processing, surplus materials and scrap, defective products and by-products generated in the manufacturing process, the business enterprise may opt not to ship back to the enterprise, upon completion of the relevant formalities with the Customs in charge at its location.   

Article 24    Business enterprises and undertakers shall cooperate in Customs supervision of goods under processing trade.

Article 25    Goods under processing trade shall use dedicated materials.

Upon Customs approval, a business enterprise may swap between bonded materials or between bonded materials and non-bonded materials, provided that the swapped materials shall belong to the same enterprise, and the swapping shall comply with the principles of "same product type, same specifications, same quantity, and non-profit".

Bonded imported materials under supplied materials for processing shall not be swapped.

Article 26Where non-bonded materials are required to be used in processing workflow, the business enterprises shall declare the ratio of use of non-bonded materials, product types, specifications, model number and quantity to the Customs truthfully.   Business enterprises shall declare to the Customs pursuant to the provisions of the first paragraph of this Article; the Customs shall verify and deduct from the total consumption for finished products for exports, at the time of verification and cancellation.

Article 27    Where there is a need to return imported materials to the original supplier due to quality defect, or variance in specifications and model number against the specifications and model number in the contract, or where there is a need to export unprocessed bonded materials due to after-sale service for exports under processing trade, the business enterprise may complete Customs declaration formalities directly with the Customs.

Bonded imported materials which have undergone processing shall not be exchanged.

Chapter 4 Verification and Cancellation for Goods under processing trade

Article 28Business enterprises shall process imported materials and re-export finished products within the stipulated period, and shall complete declaration for verification with the Customs within 30 days from exportation of the last batch of finished products under the processing trade manual, or from the expiry day of the processing trade manual.   In the event of early termination of a contract entered into between a business enterprise and an overseas party, the business enterprise shall complete declaration for verification with the Customs within 30 days from termination of the contract.

Article 29When completing declaration for verification, a business enterprise shall declare imported materials, exported finished products, scrap, surplus materials, defective products, by-products and unit consumption etc to the Customs truthfully, and submit the relevant documentation pursuant to the provisions.   Where business enterprises make declaration for verification to the Customs pursuant to the provisions of the first paragraph of this Article and with complete and valid documentation, the Customs shall accept the declaration for verification.

Article 30Customs verification and cancellation may adopt the form of paper documentation verification or electronic data verification and may inspect the factory when necessary; the enterprise shall cooperate.   Customs verification and cancellation shall be completed within 30 days from acceptance of the declaration for verification. Where there is a need for extension of time under special circumstances, an extension of 30 days may be granted upon approval by the Director-General of the direct-reporting Customs, or the Director-General of the subordinate Customs authorised thereby.

Article 31For domestic sales of bonded imported materials or the finished products under processing trade, the Customs shall levy taxes on the bonded imported materials pursuant to the law, and impose interest on deferred tax payment based on the valid approval document for domestic sales issued by the authorities in charge, unless otherwise stipulated.   Where the imported materials are subject to the restrictive provisions of the State on importation, the business enterprise shall also submit its import licence to the Customs.

Article 32Where a business enterprise returns imported materials under processing trade to the overseas party for some reason, the Customs shall carry out verification and cancellation based on the relevant return shipment documentation.   

Article 33Scrap, surplus materials, defective products, and by-products generated in the manufacturing process of a business enterprise, as well as bonded goods affected in a disaster, shall be dealt with pursuant to the administrative provisions of the Customs on scrap, surplus materials, defective products and by-products under processing trade as well as bonded goods affected in a disaster; the Customs shall carry out verification and cancellation based on the relevant documentation.   

Article 34In the event of loss of processing trade manual, the business enterprise shall promptly report to the Customs.   The Customs shall, after dealing with the matter pursuant to the relevant provisions, cancel the missing processing trade manual.

Article 35    The Customs shall issue a "Notice of Cancellation and Case Closure" to the business enterprise, for cancellation of the processing trade manual and case closure.

Article 36    Where the business enterprise has completed the formalities for guarantee, the Customs shall release the guarantee pursuant to the provisions upon cancellation and case closure.

Article 37Setting up documentation and cancellation documentation for goods under processing trade manual shall be retained for three years upon cancellation of processing trade manual and case closure.   

Article 38In the event of division, merger, bankruptcy, dissolution or any other circumstances under which normal manufacturing and business activities are ceased, the processing trade enterprise shall promptly report to the Customs, and complete Customs formalities.   In the event of seizure of goods under processing trade by a People's Court or the relevant administrative enforcement authorities, the processing trade enterprise shall report to the Customs within five working days from seizure of the goods under processing trade.

Chapter 5 Supplementary Provisions

Article 39Violation of these Measures in committing smuggling, violation of Customs supervision or any other violation of the Customs Law shall be dealt with by the Customs pursuant to the relevant provisions of the Customs Law and the Implementation Regulations of the Customs of the People's Republic of China on Administrative Penalties; where the case constitutes a criminal offence, criminal liability shall be pursued in accordance with the law.   

Article 40    The following terms in these Measures shall be defined as follows:

Processing of supplied materials shall mean that the business activities whereby the imported materials are provided by an overseas enterprise, and the business enterprise, without the need to make foreign currency payment for importation, carries out processing or assembly based on the requirements of the overseas enterprise and collects processing fee only, with the finished products being sold by the overseas enterprise.

Processing of imported materials shall mean the business activities whereby the imported materials are imported by the business enterprise which makes foreign currency payment, and the finished products are exported by the business enterprise for overseas sales.

Goods under processing trade shall mean imported materials and finished products under processing trade, and scrap, defective products, by-products etc. generated in the course of processing.

Processing trade enterprises shall include business enterprises and processing enterprises registered with the Customs.

Business enterprises shall mean various import and export enterprises and foreign investment enterprises which are responsible for entering into import and export contracts under processing trade with overseas parties, as well as external processing and assembly services companies approved to hold a business permit for processing of supplied materials.

Processing enterprises shall mean manufacturing enterprises with legal person status entrusted by a business enterprise to take charge of processing or assembly of imported materials, as well as factories established by business enterprise which are non-legal person but implement relatively independent accounting and hold an industry and commerce business permit (licence).

Unit consumption quantity shall mean the quantity of imported materials consumed by a processing trade enterprise under normal manufacturing conditions for processing and manufacturing of finished products for export and is also known as unit consumption.

Deep processing transit shall mean the business activities whereby a processing trade enterprise transfers products processed using bonded import materials, to another processing trade enterprise for further processing before re-exportation.

Undertakers shall mean enterprises or individuals that have entered into a processing contract with a business enterprise to undertake outsourced processing entrusted by the business enterprise.

Outsourced processing shall mean a business enterprise entrusting an undertaker to carry out processing of goods under processing trade, and ultimately re-exporting the finished goods with a stipulated period.

Verification and cancellation shall mean a processing trade business enterprise presenting the stipulated documentation pursuant to the provisions to declare for verification to the Customs following the re-exportation of finished products or completion of Customs formalities for domestic sales, and the Customs carrying out inspection pursuant to the provisions and completing deregulation formalities.

Article 41    Processing trade enterprises implementing network supervision which intend to carry out processing trade business shall comply with the administrative provisions of the Customs on implementation of computer network supervision by processing trade enterprises.

Article 42Processing trade enterprises which intend to launch processing trade business within special Customs supervision areas shall comply with the relevant administrative provisions of the Customs on special Customs supervision areas.   

Article 43Declaration and approval of unit consumption shall comply with the administrative provisions of the Customs on unit consumption for processing trade.   

Article 44The administrative provisions for tax collection by the Customs at the time of importation of goods under processing trade and tax refund after exportation shall be separately formulated.   

Article 45The General Administration of Customs shall be responsible for interpretation of these Measures.   

Article 46These Measures shall come into force as of the date of promulgation, repealing simultaneously the Measures of the People's Republic of China Customs on Regulation of Goods under Processing Trade promulgated via General Administration of Customs Order No. 113 on 26 February 2004, and revised pursuant to General Administration of Customs Order No. 168 and Order No. 195 respectively.