China Law Online Database : novexcn.com

You are using Guest Account

Subscribe To This Law Only

Subscribe To All Law Contents

Print This Page

Back




	CIRCULAR ON IMPROVING THE ADMINISTRATION OF SALES OF AND PAYMENTS IN FOREIGN EXCHANGE

	(Promulgated by State Administration of Foreign Exchange on August 14, 1998, Huihan [1998] No. 27)


SUBJECT : SALES OF AND PAYMENTS IN FOREIGN EXCHANGE
ISSUING DEPARTMENT : THE STATE ADMINISTRATION OF FOREIGN EXCHANGE
ISSUE DATE : 08/14/1998
IMPLEMENT DATE : 09/01/1998
LENGTH : 1,879 words
TEXT :

In order to strengthen foreign exchange administration, prevent unlawful foreign exchange remittance and illegal arbitrage, and pursuant to the Regulations on the Administration of Sales, Purchase of and Payment in Foreign Exchange, and relevant rules and regulations, we hereby make following rules on the administration of sales of and payments in foreign exchange:

1. When a designated foreign exchange bank (hereafter referred to as the "designated banks") is processing sales of and payments in foreign exchange under the payment against arrival with total amount equal to or above US$100,000, the designated bank shall in each case confirm the authenticity of the import customs declaration form (hereinafter referred to as the "Declaration Form") with the customs authorities. The designated bank shall process sales of and payments in foreign exchange with positive confirmation from the customs departments. No domestic agency shall be authorized to verify the customs document.

2. The designated bank, after consulting with People's Bank of China, shall work out a unified risk supervision and management system applicable to its entire departments, and determine credit lines for each client based on the new system, which incorporates into the unified management framework the entity's L/C opening, and various kinds of credit-related business such as outward documentary bill, discounts, confirmation, and packing loans.

3. Designated banks shall examine whether the buyer on the import contract submitted by the client, import unit on the Declaration Form, consignee on the bill of lading, and the applicant for payment-oriented foreign exchange purchase are the same person (identity). The bank is not allowed to handle any sale of and payment in foreign exchange for an applicant whose name is not in line with any of the above vouchers or bills.

4. Multiple purchases of foreign exchange based upon one copy of the Declaration Form shall be processed by one designated bank. When it is handling the payment with the Declaration Form for the first time, the designated bank shall keep the original copy of the Declaration Form for its records and return the duplicate copy to the domestic entity. The domestic entity, starting from the second time, shall go to the same designated bank with the duplicate copy of the Declaration Form. After processing sales of and payments in foreign exchange for clients, the designated bank shall sign the amount of payment and corresponding date under its official seal on both of the original and duplicate copies of the Declaration Form.

5. Designated banks shall not process sales of and payments in foreign exchange for domestic entities with the Declaration Form highlighting the site of dispatch as "China" or "Some place in China" and the destination place as "Some place in China", with exception of the Declaration Form issued by the customs authorities in Shanghai Waigaoqiao Bonded Area, Tianjin Tanggu Bonded Area, Dalian Bonded Area, Qingdao Huanghai Bonded Area, Ningbo Bonded Area, Zhangjiagang Bonded Area, Fuzhou Mawei Bonded Area, Xiamen Xiangyu Bonded Area Guangzhou Bonded Area, Shantou Bonded Area, Zhuhai Bonded Area, Shenzhen Shatoujiao Bonded Area, Shenzhen Putian Bonded Area, Shenzhen Futian Bonded Area, Haikou Bonded Area, Hainan Yangpu Development Area.

6. Designated banks shall not process foreign exchange sales of and payment for domestic entity applicants holding a Declaration Form which indicates "processing with imported material supplies", "assembling with imported components supplies" or "processing with imported supplied samples" under the trade form column.

7. Designated banks shall not process sales of and payments in foreign exchange for domestic entity applicants for "in-kind" compensation trade. Those who are required to accomplish the compensation trade in foreign exchange shall apply to SAFE or its branches with the contract of compensation trade, Registration Certificate of Foreign Debts, payment notice from oversea entities and Declaration Form, and may go to the designated banks for purchase of foreign exchange with SAFE-issued verification letter on repayment of debt principal and interest.

With SAFE-issued verification letter, the designated banks shall process the sales and payment for domestic entities under the compensation trade column. The designated banks may not directly approve the foreign exchange purchase application for the domestic entities whose Declaration Form indicate the "compensation trade" under the column of "trade form".

8. Domestic entities whose Declaration Forms indicate "equipment supplies for joint venture and joint cooperation" under foreign-funded enterprises column in the "Trade Form' shall apply to SAFE branches for purchase of and payment in foreign exchange with supportive documents approving cash investment or increase in investment capital by MOFTEC, and custom-issued tariff exemption permission. And then the entities can go to designated banks for processing sales of and payments in foreign exchange with the Foreign Exchange Sale Notice verified and issued by SAFE branches Subsequently, the designated banks shall handle sales of and payments in foreign exchange according to the Notice.

9. Domestic entities applying for purchase of and payment in foreign exchange under transit trade undertaken by prepayment and subsequent reimbursement shall apply for and obtain the Reference Form for Imports Payment in Foreign Exchange with SAFE branches by presenting the import and export contracts, pro forma invoices, buyer's L/C, letter of payment guarantee issued by a foreign bank and verified and sealed by a domestic bank, and the import L/C. They can then go to the designated banks for processing purchase of and payment in foreign exchange with the Foreign Exchange Sales Notice and Reference Form for Import Payment in Foreign Exchange approved and issued by SAFE branches. Designated banks shall handle sales of and payments in foreign exchange for the entities by the Foreign Exchange Sales Notice and Reference Form for Import Payment in Foreign Exchange.

10. After processing the sale of and payment in foreign exchange in accordance with the Regulations on the Administration of Sales, Purchases of and Payment in Foreign Exchange, the designated banks S shall affix a seal of "foreign exchange provided" on the Declaration Form and other valid vouchers. The designated banks are not allowed to handle sales of and payments in foreign exchange for the clients whose Declaration Forms or other valid vouchers are already stamped with the seal of "foreign exchange provided".

11. Under the conditions of trade imports are settled by bill collection and payment against delivery, and the date of purchase of and payment in foreign exchange has exceeded the time line set for customs clearance by 90 days, domestic entities shall go to SAFE branches for processing foreign debt registration with import contract, import Declaration Form (special copy for verifying import payment in foreign exchange) and invoices within 15 days after the arrival of import delivery. After examining and verifying vouchers and business bills presented by domestic entities, SAFE branches shall issue "Registration Certificate of Foreign Debt" and other supportive documents to the domestic entities, and indicate "foreign debt registration finished" on the Declaration Form. To purchase foreign exchange for payment or transfer payment from foreign exchange accounts, domestic entities shall apply to SAFE branches with Registration Certificate of Foreign Debt, import contract and the Import Declaration Form, and then go to the designated banks for processing with verification and approval documents issued by SAFE branches.

Designated banks shall process sales of and payments in foreign exchange or domestic entities with verification and approval documents issued by SAFE branches. The designated banks may not directly handle sales of and payments in foreign exchange for domestic entities whose date of payment in foreign exchange has surpassed the time limit for the Customs Declaration Form by 90 days with the Declaration Form indicating "foreign debt registration finished".

12. For the domestic entities dealing with imports funded by foreign government loans, credits from international financial organizations, international commercial loans, funds raised by bond issuance, or the imports accomplished on behalf of domestic bid winners at international invitation for tenders, the domestic entities shall go through verification and cancellation procedures for import payment with the Declaration Form no matter whether the payment in foreign exchange is made within China or transferred from oversea accounts.

13. Domestic entities whose advance payment for import does not exceed 15% of the total contracted value, or surpasses 15% but is less than the value equivalent to US$10,000, shall go to the designated banks for processing purchase of and payment in foreign exchange with the letter of advance payment guarantee issued by a foreign bank and verified and sealed by a domestic bank, import contracts, verification letters for import payment in foreign exchange and pro forma invoices. Domestic entities whose advance payment for import exceeds 15% of the total contracted value, and surpasses the value equivalent to US$10,000, shall obtain the Reference Form for Import Payment in Foreign Exchange from SAFE with the letter of advance payment guarantee issued by a foreign bank and verified and sealed by a domestic bank, a statement stamped by the legal person, import contracts, and pro forma invoices. The SAFE is entitled to review these submitted documents. The designated banks shall process sales of and payments in foreign exchange with SAFE-issued Reference Form for Import Payment, Foreign Exchange Sales Notice and above-noted valid vouchers and commercial bills. After processing the advance payment in foreign exchange that does not exceed 15% of the total contracted value, but surpassed the value equivalent to US$300,000, the designated banks shall fill out the "Registration Form for Reference of Advance Payment in Large Amount and Commission Fee" on a monthly basis, and report the record to SAFE within first ten working days of each month. SAFE may conduct sample-check for verification afterwards, the sampling rate will be no less than 50%. SAFE and the designated banks shall strictly review and verify the above vouchers.

14. After viewing the Verification and Cancellation Form and attached vouchers and bills submitted by domestic entities in accordance with Article 14 of Provisional Regulations on the Administration of Verification and Cancellation of Import Payment in Foreign Exchange, SAFE branches shall stamp "already submitted for review" on the Verification and Cancellation Form and Custom Declaration Form and attached documents for record. All of the attached vouchers and bills (including the Customs Declaration Form) shall not be returned to the domestic entities. SAFE branches shall double-check all customs Declaration Form with the customs authorities.

SAFE branches shall be careful of keeping the returned bills and vouchers for check and reference for up to two years. The designated banks are not allowed to process sales of and payments in foreign exchange for domestic entities holding the Declaration Form stamped with "already submitted for review".

15. SAFE branches shall strictly administrate extending the Reference Form for Import Payment in Foreign Exchange and handling verification and cancellation for import payment in foreign exchange, and shall establish internal double-check system. As for sales of and payments in foreign exchange by domestic entities highlighted in the Reference Form for Import Payment in Foreign Exchange, SAFE branches shall verify and cancel item by item pursuant to Provisional Regulations on the Administration of Verification and Cancellation of Import Payment in Foreign Exchange.

16. The Circular will take effect as of September 1, 1998. Each SAFE branch shall transmit the Circular to all financial institutions (including foreign-funded financial institutions) and import entities under its jurisdiction. All designated banks shall forward it to affiliated branches. Please promptly inform SAFE if any problem arises in the process of implementation.