CIIE: Customs Regulations on Import Exhibits

This article was written by Feng Sufang and Sun Xing

The China International Import Expo (CIIE) which took place in Shanghai on 5 November 2018 was the world's first import expo held at the national level, and was an important step taken by China to pursue a new round of high-level opening-up. What are the opportunities offered by CIIE? And how could foreign enterprises seize them and start selling their products to the Chinese market? The article suggests that you start from getting a good understanding and then utilising the CIIE policies as well as China's regulations on import exhibits.

Temporary Admission is the primary method adopted by the customs authorities for the regulation of import exhibits into China.

Goods under Temporary Admission refers to the goods temporarily imported and re-exported within prescribed time limits, including: 

• goods temporarily imported under ATA carnets and 
• goods temporarily imported without ATA carnets.

The ATA (the acronym for Admission Temporaire/Temporary Admission) carnet is an international customs document specially created by the World Customs Organization to temporarily permit the import of certain goods. It can be nicknamed as the "passport" for import exhibits. With ATA carnets, goods may be imported duty-free and exempted from preparation of customs declaration forms when entering China or other ATA member countries. The benefits and major customs regulatory requirements for import exhibits under Temporary Admission are summarized as follows:

• Duty-free importation temporarily; and
• General exemption from submission of import licensing documents for verification.

(1) Guarantee for duties and taxes is required when imported.

For goods temporarily exported under ATA carnets, the China Council for the Promotion of International Trade (China Chamber of International Commerce) will provide a general guarantee to the General Administration of Customs ("GACC"). For goods temporarily imported or exported without ATA carnets, the consignees or consignors should pay the local competent customs a sum of security according to the requirements of the customs.

(2) Exhibits shall be re-exported within 6 months.

If it is necessary to extend the re-exportation time limits under special circumstances, it is required to file an extension application with the local customs. The time limits may be extended for a maximum of 3 times, with each extension up to 6 months.       

(3) Exhibits sold in China or not re-exported are subject to import duties and taxes. The customs will levy import duties and taxes on import exhibits sold in China or not re-exported within prescribed time limits. Such duties and taxes will be collected on the sales price verified by the customs as the dutiable price at the applicable tax/duty rate effective on the date when the declaration documents were accepted by the customs. Import licensing documents, if required, should also be submitted.         

(4) Relevant customs formalities are required for import exhibits damaged or lost. If the import exhibits are damaged or lost due to force majeure, it is required to submit supporting materials issued by relevant authorities for the verification of the customs and go through the re-exportation formalities. If damaged or lost due to other reasons than force majeure, such goods are subject to import duties/taxes in accordance with relevant customs provisions.         

Bonded exhibition and trading is an innovative customs clearance policy for import exhibits in recent years.

The bonded exhibition and trading allows customs-registered businesses within customs-controlled areas to transport bonded goods out of such areas for exhibition and trading. In the context of customs reform, there are no clear provisions of law on the bonded exhibition and trading, while the customs regulate related activities by means of announcement by the customs authorities directly under the GACC. Although these announcements may vary in content, the benefits and requirements of bonded exhibition and trading in common are summarized as below:

• Goods may exit in-bond the customs-controlled areas to be exhibited on relevant exhibition platforms; and
• Transactions occurred during bonded exhibition are to be taxed after sales in a centralized declaration manner.

• An amount of guarantee equal to the duties payable shall be provided for goods subject to bonded exhibition and trading when such goods exit such zone or area.
• Exhibitors shall have in place the computer management system satisfactory to customs requirements to record entries, exits, stock, and sales of goods during exhibition in a faithful, accurate, and detailed manner. The management system ought to be connected to the network of customs authorities to provide real-time information on such goods.
• The goods for bonded exhibition and trading shall be transported back to the special customs supervision zone within 6 months from the date of exit. If it is necessary to extend the exhibition period, an application for extension shall be submitted to the customs authorities. The requirements of regional customs may vary in terms of times and duration of extension.
• Domestic sales are taxable. The customs authorities will determine the dutiable value based on domestic sales price. If any license or permits are required for goods subject to bonded exhibition and trading, such license or permits shall be provided to competent customs authorities prior to sales.

(1) Adoption of tax preferential policy for imported exhibits.

The Ministry of Finance released the Notice on the Tax Preferential Policy for Imported Exhibits Sold during the Period of the First China International Import Expo (Cai Guan Shui [2018] No.43), pursuant to which a reasonable quantity of imported exhibits sold during the exhibition period of the first CIIE are exempted from customs duties, excluding banned imports by the state, endangered species of fauna and flora and products made thereof, and 20 commodities and automobiles that are not subject to tax or duty exemption in accordance with relevant national regulations, and the import value-added tax and the consumption tax shall be levied at 70% of the tax amount payable. The notice sets forth the quota of sales income on which that each of certain named participant enterprises is entitled to tax preference, and sets a maximum limit of US$20,000 for each of those unnamed. As to those in excess of such quota or limit, respectively, that are not going to be returned outbound, the existing tax policy shall apply and the duty shall be imposed upon them without tax preference.

(2) Extension of the term of ATA carnets of the exhibits.

The term of the first temporary entry of the exhibits for CIIE under ATA carnets is extended from six months to one year.

(3) Inbound exhibits are allowed to be transferred to special customs supervision zones and bonded supervision places and go through the customs procedures.

In accordance with existing customs regulations, inbound exhibits shall in principle be shipped back outbound after the expo, and those transferred to special customs supervision zones and bonded supervision places are not considered as shipped back outbound. Now, the customs allow imported exhibits to be transferred to special customs supervision zones and bonded supervision places and go through the customs procedures without being shipped outbound actually. At this moment, the goods are transformed from exhibits to bonded goods in its nature, and after that, relevant enterprises may continue to look for a buyer for them by carrying out bonded exhibition and other related activities in accordance with relevant regulations on bonded goods.

(4) Relevant prepackaged food exempted from labeling in Chinese.

However, the customs still require participant enterprises to specify in Chinese the name of food, shelf life, contraindication and direction/usage right beside the exhibits.