On 26 April 2024, the Standing Committee of the National People’s Congress passes the Law of the People’s Republic of China on Customs Duties (“Customs Duty Law”), with which China has enacted laws for 13 out of 18 tax types. The new Customs Duty Law will come into effect on 1 December 2024.
Prior to the legislation of the Customs Duty Law, the Regulations of the People’s Republic of China on Import and Export Duties (Revised in 2017) (“Customs Duty Regulations”)is the main regulation on customs duties. The new Customs Duty Law is not an amendment to the revised Customs Duty Regulations, it raises some practical provisions from relevant announcements and regulations to the law and makes the law more comprehensive. In the following article, we will provide you with some key changes under the new Customs Duty Law.
- Clarification that the CBEC platform, logistics enterprises and customs declaration enterprises are withholding agents of customs duties
With the development of cross-border e-commerce (“CBEC”), the new Customs Duty Law clarifies the obligation of parties involved in CBEC transactions. According to Article 3, e-commerce platform operators involved in CBEC retail importation, logistics enterprises and customs declaration enterprises are obliged to withhold or collect customs duties on behalf of the consumers.
- Taxpayers will be able to consolidate their tax payments
In Article 43, the provisions for consolidated payment of customs duties for taxpayers who meet the requirements and provide a guarantee to the customs authorities are incorporated into the law. Compared to the previous model, which required taxpayers to make a payment for each importation, the consolidated payment module is more convenient for taxpayers.
- The duration of tax refund has been extended to three years
Article 51 grants an extension of the refund period when taxpayers find that they have overpaid customs duties. Prior to the new Customs Duty Law, the refund period for overpayments was one year, and the new Customs Duty Law extends this period to three years. The purpose of this extension is to protect the legitimate rights and interests of taxpayers.
- The period for Customs to confirm the amount of duty payable has been extended to three years
The period for Customs to review the amount of duty payables has also been extended from one year to three years. If Customs finds that taxpayers have paid less customs duties than they should have, they may require taxpayers to pay the customs duties and any overdue payment within three years.
- Taxpayers with unpaid tax payments will be restricted from leaving the country
Article 49 states that Customs may restrict taxpayers or their legal representatives from leaving the country if they fail to pay the full amount of customs duties or overdue payments without providing a guarantee to Customs. This is a new administration regulation that was neither covered in the Customs Duty Regulations nor in the Customs Law.
- Customs’ enforcement measures for unpaid taxes
To protect the rights and interests of the country, the new Customs Duty Law provides Customs enforcement measures to collect the unpaid tax payments, including unpaid customs duties and overdue payments. In Article 50, the law states that if taxpayer refuses to pay without reasonable explanation, the Customs may, upon approval, notify the banking financial institution to transfer the amount from the taxpayer’s deposit or remittance, or seize the goods or other property of taxpayer.
The new Customs Duty Law will come into effect from 1 December 2024, so there is still time for companies to study for the new regulations during this period. Since the new Customs Duty Law aims to protect the interests of the country and taxpayers and to promote the foreign trade, we recommend that companies involved in international trade carefully review the regulations and prepare for the upcoming Customs Duty Law in advance.
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Eloise Yao
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