Beginning Dec. 1 China will implement its new tariff law as well as modernized measures on duty collections for imported and exported goods. U.S. companies doing business in China should be aware of the key changes being made so they are prepared for potential enforcement measures and customs audits in the future.
- The new laws and regulations enhance the applicability of customs rulings in China. Though the effectiveness of such rulings is not as strong as those issued by U.S. Customs and Border Protection, they are still an option for businesses to obtain clarification on classification, valuation, and origin issues.
- The period for which businesses may seek duty refunds, and for which China Customs may demand that businesses pay import duties, has been increased from one year to three years.
- The tariff law codifies new declaration measures introduced in past years, such as two-step declarations and consolidated declarations.
- China Customs may now take stronger enforcement measures if import duties are not paid.
- New departments within China Customs will be established to lead efforts on duty collection, classification, and valuation. They will adopt a risk-based approach to selecting businesses as audit targets, focusing on classification, origin, and valuation.
- China will for the first time require e-commerce platforms and logistics service providers to act as duty and value-added tax withholding agents.
- Time limits for goods returned to China and reexported goods will be increased from one year three years, subject to approval by China Customs.
- China’s customs valuation regulations are expected to be updated to improve harmonization with international practice.
In response to these and other changes, businesses in China should consider the following actions: (1) monitor regulatory updates and understand the compliance requirements, (2) prepare for customs audits and conduct internal compliance reviews, (3) apply for customs rulings if possible, (4) apply for or maintain authorized economic operator status in China to obtain trade facilitation benefits, and (5) use voluntary disclosures to mitigate penalties and risks.
For more information on these developments and how your business should respond, please contact Xiaofeng Xu via email.
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