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	NOTICE OF ADJUSTING SOME IMPORT TAXES PREFERENTIAL POLICIES

	(Caishui No. 146[2002] the Ministry of Finance, State Planning & Development Commission (SPDC), State Economic and Trade Commission (SETC), Ministry of Foreign Trade and Economic Cooperation (MOFTEC), General Administration of Customs and the State Administration of Taxation promulgated on September 4, 2002, which shall come into force as of October 1, 2002)


SUBJECT : IMPORT TAXES; PREFERENTIAL POLICIES; ADJUSTMENT
ISSUING DEPARTMENT : MINISTRY OF FINANCE, SPDC (DISSOLVED), SETC (DISSOLVED), MOFTEC (DISSOLVED), GENERAL ADMINISTRATION OF CUSTOMS AND STATE ADMINISTRATION OF TAXATION
ISSUE DATE : 09/04/2002
IMPLEMENT DATE : 10/01/2002
LENGTH : 743 words
TEXT :

Some of the present preferential policies on import taxes are moderately adjusted, and the relevant adjusted policies are hereby notified as follows:

I. Adjusting tax policies for the relevant investment projects approved before April 1, 1996

For technical renovation projects, infrastructure projects (including major construction projects) and foreign investment projects, including imports within the remaining quota of projects financed by loans from foreign governments or international financial institutions, approved prior to April 1, 1996, the Notice of the State Council on Adjusting the Tax Policies for Imported Equipment (Guofa No.37 [1997]) shall be applied, i.e., their equipment for self use imported within the project quota or the total amount of investment shall be exempted from the import customs duties and the import value-added tax, except commodities listed in the Catalog of the Imported Commodities for Domestic Investment Projects Not Exempted from Taxes and the Catalog of the Imported Commodities for Foreign Investment Projects Not Exempted from Taxes.

II. Adjusting implementation procedures regarding "permitted foreign-invested projects of which all the products are directly exported" (hereinafter referred to "all-export projects") stipulated in the Catalog of Guidance of Industries for Foreign Investment.

(1) all-export projects that are approved after the date of implementation of the policy adjustments in this Notice (hereinafter referred to the "implementation date") shall pay customs duties and import value-added tax for their imported equipment. Ministry of Foreign Trade and Economic Cooperation (MOFTEC) shall form a joint verification group in conjunction with other relevant departments to verify whether the products of the all-export projects are all directly exported. Such verification shall last for 5 years after the start-up date of production of the all-export projects. The detailed procedures for such verification shall be formulated by MOFTEC in conjunction with other relevant departments. If it is proved by the verification that the all-export projects do export all their products directly in the 5-year period, the all-export projects will receive an annual tax refund of 20% of the total import taxes they have paid, and the tax refund will complete at the end of the fifth year. If it is proved by the verification that the all-export projects do not export all their products directly in the 5-year period, the all-export projects will not receive the annual tax refund for that year and they shall pay back the tax refund they have received in the previous year(s) and receive punishments pursuant to the law.

(2) If an all-export project approved prior to the implementation date still needs to import equipment under the project, its new imported equipment will continue to be exempted from import taxes. However, within the 5-year verification period from the start-up date for its production, the relevant authorities shall check whether its products are all directly exported. If an all-export project approved prior to the implementation date has completed its import of equipment, the relevant authorities will not check whether its products manufactured before the implementation date have all been directly exported; but the authorities may check on a selective basis whether its products manufactured after the implementation date but still within the 5-year verification period are all directly exported. Any problem found out in the aforesaid checking shall be dealt with pursuant to the law, and the detailed procedures shall be worked out by MOFTEC in conjunction with the relevant departments.

(3) Tax refund within the 5 years with respect to the imported equipment of the all-export projects approved after the implementation date shall be handled in accordance with the Notice on Tax Refund for Some Imported Commodities (Caiyuzi No.42 [94]) issued by the Ministry of Finance, the State Economic and Trade Commission, the State Administration of Taxation and the General Administration of Customs.

III. Applications for tax reduction or exemption on imports on case-by-case basis no longer available

In principle, applications for tax reduction or exemption on imports will no longer be accepted, examined and approved on the case-by-case basis in the future. No tax exemption will be granted to imports of raw materials for production purpose, the "20 commodities of no tax reduction or exemption listed by the State Council" and vehicles imported for important activities or grand ceremonies. In case of real need for tax reduction or exemption on imported commodities, the Ministry of Finance shall exercise a strict scrutiny in conjunction with other relevant departments and report to the State Council for examination and approval.

IV. This Notice shall come into force as of October 1, 2002.