Interim measures for examination of product export of foreign-invested enterprises in the permitted category whose products are all for export direc

Issued by: The Ministry of Commerce, Ministry of Finance, General Administration of Customs and State Administration of Taxation
Document of issuance: No.1, 2006 Shang Zi Fa
Date of issuance: March 1, 2006

Article 1. These Measures are made pursuant to stipulations of foreign investment laws and regulations and laws and regulations governing customs surveillance with a view to standardising the operating activities of "Foreign-Invested Enterprises in the Permitted Category Whose Products Are All for Export Directly", following the requirements of the Circular on Adjusting Some Preferential Import Taxation Policies (No.146, 2002 Cai Shui) issued by the Ministry of Finance, the former State Development Planning Commission, the former State Economic and Trade Commission, the former Ministry of Foreign Trade and Economic Cooperation, the General Administration of Customs and the State Administration of Taxation.

Article 2. The "Foreign-Invested Enterprises in the Permitted Category Whose Products Are All for Export Directly" to which these Measures apply (hereinafter referred to as "enterprises with all products for export") refers to foreign-invested enterprises that have been approved according to law and recognised as "enterprises with all products for export" by the examination and approval department, and also those who enjoy the policy for reduction and exemption of tax on imported equipment according to law.

These Measures shall not apply to the "enterprises with all products for export" that were established prior to October 1, 2002 and whose business scope of products may be categorised into other fields of the encouraged category, and other foreign-invested enterprises.

Article 3. Examination of product export as said in these Measures covers check and investigation. Check refers to examination of the product export of the "enterprises with all products for export" that were established after October 1, 2002 by the departments in charge of commerce of all provinces, autonomous regions, municipalities, cities directly under central planning and the Xinjiang Production & Construction Corps (hereinafter referred to as "provincial level commerce departments") in cooperation with the local commissioner's office of the Ministry of Finance, the local customs and the state taxation department (hereinafter referred to as "related departments"). Investigation refers to examination of product export of the "enterprises with all products for export" established prior to October 1, 2002 by the provincial level commercial departments in cooperation with related departments.

Article 4. The Ministry of Commerce is responsible for the work of examining product export of the "enterprises with all products for export", and will also guide the nationwide examination work in cooperation with the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation. The provincial level departments in charge of commerce shall be responsible for examination of their local "enterprises with all products for export" in cooperation with related departments.

Article 5. The term for check is five calendar years starting from the date when the "enterprise with all products for export" started production. If the date when production started was after September 1 that year, the term for check shall start from January 1 of the following year.

Article 6. An "enterprise with all products for export" receiving product export check shall submit a report of its product output, export or sales volume for the preceding year (hereinafter referred to as "report") in duplicate, as well as the import (export) customs declaration documents involving the export products to the local provincial level department in charge of commerce prior to January 31 every year.

The report submitted by an "enterprise with all products for export" shall be signed by the legal representative of the enterprise and also be affixed with the seal of the enterprise. Its contents shall include: the name of the enterprise, the time of its establishment, the time when production starts, the output in the preceding year, the export, whether or not sale on the domestic market is available, and tax payment of the enterprise in the current year. The financial report of the enterprise shall also be attached.

Article 7. The provincial level department in charge of commerce shall examine the report in cooperation with related departments within 60 days after it is received. If the product export complies with the stipulations of Article 11 of these Measures, the department in charge of commerce and the local financial supervision commissioner's office, the customs and the state taxation department shall add on the report filed by the "enterprise with all products for export" the wording of "true product export", and also affix their seals. The provincial level department in charge of commerce shall, after examination, make a summary report of the product export of the local "enterprises with all products for export" to the Ministry of Commerce prior to April 15 every year.

Article 8. The "enterprises with all products for export" established after October 1, 2002 that received and passed the annual check shall apply for handling tax refunding procedures according to related stipulations within 15 days after receiving the "product export/sale volume report" affixed with the seals of the provincial level department in charge of commerce and the local customs, state taxation department and financial supervision commissioner's office.

Article 9. The specific starting and ending dates of the term for investigation are as follows:

1. For "enterprises with all products for export" that were established and put into production prior to October 1, 2002 and have continued to import equipment within the total amount of investment after October 1, 2002, the term for investigation is from October 1, 2002 to five years after the enterprise starte production. The term for investigation of the imported equipment that had not been actually put into productive use when the enterprise started production shall be five years after the said imported equipment was actually put into productive use.

2. For "enterprises with all products for export" that had been established but had not yet been put into production prior to October 1, 2002 and have continued to import equipment within the total amount of investment after October 1, 2002, the term for investigation is five calendar years starting from the date when the enterprise started production. If the date when production started was after September 1 that year, the term for investigation shall start from January 1 of the following year.

3. For "enterprises with all products for export" that were established prior to October 1, 2002 and have no longer imported equipment after October 1, 2002, the term for investigation is from October 1, 2002 to five years after the enterprise started production.

Article 10. The provincial level departments in charge of commerce and the related departments shall investigate in a selective way the product export of the "enterprises with all products for export" that still need to receive investigation prior to the end of March every year. The provincial level departments in charge of commerce shall issue a notice to the "enterprises with all products for export" to receive the investigation, and the enterprises receiving such notice shall submit to the local provincial level department in charge of commerce their own product export/sale volume report for the preceding year within 15 days after receiving the notice for investigation. The contents of the report to be submitted and the way of reporting are identical to the product export/sale volume report provided in Article 6 of these Measures.

The provincial level departments in charge of commerce shall make a summary investigation results report of their local "enterprises with all products for export" to the Ministry of Commerce prior to May 1 every year, and also inform the local customs of the names of the enterprises passing the investigation.

Article 11. For an "enterprise with all products for export", the total amount of its directly exported products in the preceding year shall reach 100% of its product sales revenue in the preceding year.

Article 12. "Enterprises with all products for export" shall ensure that the materials they submit to the provincial level department in charge of commerce are genuine and errorless.

Article 13. For "enterprises with all products for export" that have already enjoyed import tax refund or tax exemption policies, if in the following term for examination they have undertaken domestic sales due to the change of operational environment or market situation, they shall voluntarily apply to the local customs to make up for the cumulative import tax proceeds that have been refunded or exempted within one month. The import tax proceeds refundable for the current year and the following years shall no longer be refunded. On the basis of this, the administrative penalty for the aforesaid domestic sale acts will be lessened or exempted.

If any "enterprise with all products for export" within the term for examination fails to apply to make up the due tax payments for its domestic sale acts in due time, or it hides on purpose the actual circumstances in its "product export/sale volume report" submitted to the provincial level department in charge of commerce or makes a fake report that the enterprise's export reaches the examination standards, once found, the import tax proceeds refundable for the current year and the following years will no longer be refunded. In addition, the cumulative import tax proceeds already refunded or exempted shall be repaid. The related departments will punish the aforesaid acts according to law. If any enterprise sells or transfers without authorisation the customs surveillance equipment, the case shall be handled by the customs according to law.

Article 14. The departments in charge of commerce at all levels and the related departments shall be diligent in supervising and examining the product export of enterprises. They shall adhere to the principles and handle their work according to law with regard to the problems found in check and investigation.

Article 15. The Ministry of Commerce shall complete and submit to the State Council the report on export examination of the "enterprises with all products for export" for the preceding year in cooperation with the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation prior to the end of June every year.

Article 16. The power of interpretation of these Measures is vested with the Ministry of Commerce in cooperation with the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation. The Measures shall be implemented as of the date of their promulgation.