The “Customs Duties Law” shall come into force as of December 1, 2024

In 1985, China promulgated the “Regulations on Import and Export Duties”, which has undergone six revisions in nearly 40 years of implementation. In view that Article 11 of the “Legislation Law” stipulates that only laws can be formulated for the basic system of taxation, although the “Customs Law” stipulates duties, the specific duty rates and administrative management are mainly implemented in accordance with the “Regulations on Import and Export Duties”. In addition, with the development of market, especially the e-commerce, the original duties collection policy faces a huge challenge. Therefore, the 9th meeting of the Standing Committee of the 14th National People’s Congress passed the “Customs Duties Law” on April 26, 2024, which will come into effect on December 1, 2024.

The majority provisions of the “Customs Duties Law” are the same as stipulated in the “Regulations on Import and Export Duties”, regarding the amended provisions and newly added ones, we have selected several newly added ones to interpret as follows.

1.To add the rules for determining duty rates under special circumstances and the process for adjusting duty rates.

Article 11 prescribes that, “The application of duty rates shall comply with the corresponding rules of origin. For the goods obtained entirely in a country or region, the country or region is the place of origin. If the goods are produced in two or more countries or regions, the country or region in which the final substantive change is made is the place of origin. Where there are otherwise provisions provided by the State Council, according to international treaties or agreements concluded or jointly acceded to by the People’s Republic of China, on the determination of the origin, such provisions shall prevail. The specific determination of a place of origin of imports is subject to this Law as well as the provisions of the State Council and the relevant departments thereof.”

Article 15 prescribes the process for adjusting duty rates, in which, any adjustment to the MFN duty rate, duty rate quota and export duty rate within the scope undertaken in the Protocol on the Accession of the People’s Republic of China to the World Trade Organization, or any adjustment to the countries or regions to which the preferential tariff rate is apply, or the scope of goods and tariff rate, or any adjustment to the general tariff rate, shall be decided by the State Council and filed with the Standing Committee of the National People’s Congress for the record.

2. Regarding those special circumstances related to anti-dumping duties, countervailing duties, duty under safeguard measures, or where any country or region fails to implement the MFN treatment clause or the preferential duty clause of the international treaty or agreement concluded with or jointly acceded to by the People’s Republic of China, Article 19 prescribes that, “if the duty payer concerned fails to provide evidentiary materials, or has provided evidentiary materials but the Customs, upon examination, is unable to rule out that the goods’ place of origin is the country or region against which the stipulated measures are adopted, the higher of the following two tariff rates shall apply to such imports: (1) the tariff rate which is the sum of the maximum tariff rate applicable to the goods due to the adoption of stipulated measures and the applicable tariff rate stipulated in Article 12, 13 or 14 hereof or (2) the general tariff rate.”

3.To clarify the calculation method.

Article 23 prescribes that, “Customs duties are levied on an ad valorem, quantity or compound basis. Where customs duties are levied on an ad valorem basis, the amount of duty payable shall be computed by multiplying the dutiable value by the proportional duty rate. Where customs duties are levied on the basis of quantity, the amount of duty payable shall be computed by multiplying the quantity of goods by a fixed duty rate. Where customs duties are computed on a compound basis, the amount of duty payable shall be the sum of the dutiable value multiplied by the proportional duty rate and the quantity of goods multiplied by a fixed tax rate.”

4. To delete the supplementary duties.

According to the “Regulations on Import and Export Duties”, where the Customs discovers upon clearance that there has been a shortfall in the customs duties collected or omission in collection, the Customs shall collect the shortfall amount from the taxpayer within 1 year from the date of payment of customs duties or customs clearance.; and where such shortfall or omission in collection is caused by a breach of provisions by the taxpayer, the Customs may pursue the collection of such customs duties for up to 3 years from the date of payment of customs duties or customs clearance, and may charge a daily overdue fine. Article 45 stipulates that within three years from the date of duty payment by a duty payer or withholding agent or the date of customs clearance, the Customs shall have the right to confirm the amount of duty payable by the duty payer or withholding agent; if the duty payer fails to pay within the stipulated period, an overdue fine shall be computed with effect from the date of expiry of the stipulated period.

5. To add administrative penalty basis.

Article 62 stipulates penalties for a duty payer who fails to fulfill its obligation of paying duties merges or demerges, but fails to report to the Customs prior to such merger or demerger. Article 63 stipulates penalties for hindering the Customs from recovering the amount of duties in arrears by improper means, that is, the Customs will recover the said amount of duties from the duty payer, and give the withholding agent a fine of not less than 50% but not more than three times the amount of duties which should have been withheld or collected. Article 64 stipulates that with regard to any withholding agent who fails to withhold or collect the amount of duties which should have been withheld or collected, the Customs will recover the said amount of duties from the duty payer, and give the withholding agent a fine of not less than 50% but not more than three times the amount of duties which should have been withheld or collected.