On 28 June 2017, the General Administration of Customs (“GAC”) issued Announcement of the General Administration of Customs on the Implementation of National Customs Clearance Integration Regime Reform (Announcement No.25), announcing that the Customs Clearance Integration Regime Reform will be rolled out on a nationwide basis, effective from 1 July 2017.
Prior to Announcement No.25 expanding these new regimes nationwide, GAC ran a pilot of the National Customs Clearance Integration Regime in Shanghai from 1 June, 2016. Later, GAC Announcement  No. 62 (“Announcement No. 62”) issued on 29 October 2016, rolled out key elements of the reforms for selected types of goods in a number of ports. 【Please refer to KPMG China Tax Alert: China Customs Authority Conducts Pilot of Independent Customs Declaration and Tax Payment for Imported Goods (Issue 30, November 2016) 】
The Customs Clearance Integration Regime Reform is expected to nationally standardize law enforcement and improve customs clearance efficiency – its main features and their impact are explored in this KPMG Alert.
The Customs Clearance Integration Regime is composed of two key elements, referred to as the “Two Centres” and the “Three Systems”, described below:
1. Two Centres
|TCAC||Responsible categories of imported goods||Responsible HS codes|
|Beijing, Tianjin||Agricultural and forestry products, prepared foodstuffs, pharmaceutical products, light industry products, miscellaneous manufactured articles, textile articles, aircrafts, etc.||58 chapters (Chapter 1 to 24, Chapter 30, Chapter 41-67, Chapter 88, Chapter 93-97), 3461 tariff codes in total|
|Shanghai||Machinery and electrical equipment (electromechanical instruments and meters, transportation vehicles, etc.)||8 Chapters (Chapter 84 to 87, Chapter 89 to 92), 2286 tariff codes in total|
|Guangzhou||Chemical products (chemical raw materials, high-polymer products, energy products, mineral products and metal products)||30 Chapters (Chapter 25 to 29, Chapter 31-40, Chapter 68-83), 2800 tariff codes in total|
2. Three systems
The three customs clearance regime systems rolled out by Announcement No.25 include “One Declaration with Review in Stages”, “Reform of Tax Collection and Administration Procedures”, and “Cooperative Supervision”:
With the three Systems, administration of import/export declarations will follow three steps:
Step 1 Inspection before release of goods
RPCCs shall analyze whether the imported goods have safe entry risks such as being restricted/forbidden imports, giving rise to patent and trademark infringement, or involving untruthful declarations of commodity name or description, specification and quantity. Instructions will be given by RPCCs to on-site customs personnel to inspect specific batches of imported goods. TCACs shall conduct risk analysis of tax-related matters before release of goods, and instruct on-site customs personnel to carry out on-site goods verification and examination in case of significant tax collection risk.
Step 2 Risk screening after release of goods
TCACs will conduct post-importation batch review on tax-related matters in customs declaration forms, screen and select high-risk importations, carry out verification work. TCACs will reach out to the companies or instruct in-charge customs authorities to conduct audits, after the release of goods.
Step 3 Regular or special audit performed by in-charge customs
The in-charge customs will be mainly responsible for performing post-import supervision through regular or special audits.
After the implementation of National Customs Clearance Integration Regime on a nationwide basis, the majority of imported goods will be released after the importer declaration passes the automated system review (i.e. after the computer system checks that all the relevant information has been included on the electronically filed customs declaration form). Manual review of customs declaration documents is estimated to reduce to less than 10% of imports following the rollout of the new system. TCACs will perform batch review on the tax-related matters in approximately 20% of the importer self-declarations after the release of goods. A comparison between the old and new regimes is set out below:
|Old regime||New regime|
|Declaration process||Most importations are to be reviewed before release of goods for inspection on consistency with declaration documents||Most of the customs clearance will be completed through independent customs declaration while high risk imports will be filtered out for further review before release of goods|
|Tax collection and administration||Valuation and HS code classification of imported goods will be reviewed before release of goods and post-importation audit will be performed by customs audit and other function sectors||Customs enhances comprehensive customs inspection and audit after release of goods|
Enterprises are likely to benefit from the implementation of National Customs Clearance Integration Regime as follows:
Declaration at location different from importation port
Enterprises are entitled to choose a suitable port and clearance mode for customs declaration. For example, an enterprise could import goods at Port A while it declares with local Customs located in Port B. Before the reform, imports and customs declarations needed to be conducted at the same port of entry, or at the in-charge Customs upon approval from the port of entry.
Consistent law enforcement by Customs
Different regional customs authorities used to have different interpretations of customs policies and regulations. This resulted in the same imported goods being subject to different taxation treatment at different ports.
Under the new regime, the three TCACs are expected to conduct uniform high-level inspection and risk review of importations nationwide, to minimize the inconsistency of regulation enforcement by local Customs. Enterprises can establish unified operating process standards, and centralize customs clearance procedures to reduce expenditure of time and operating costs. They can consequently shift more focus to customs risk control and internal process improvement.
Improvement of customs clearance efficiency
According to the statistics from Customs, average customs clearance time has been reduced by one third since 1 July 2017. It is expected that the clearance time will continue to reduce. It can be foreseen that after the implementation of the National Customs Clearance Integration system, Customs will devote greater resources to post-import supervision. Enterprises are consequently expected to encounter more custom inspection and audit and are recommended to optimize internal processes, and utilize periodic self-inspections and voluntary disclosure mechanisms.
In responding to the changing environment of Customs supervision, KPMG can help companies with the following: