Streamlining Customs Regulations: A Detailed Analysis of the General Administration of Customs Announcement No. 127 of 2023

In a bid to further optimize the business environment and stimulate the high-quality development of foreign trade, the General Administration of Customs of the People’s Republic of China recently released Announcement No. 127 of 2023. Drawing on the provisions of the “Customs Law of the People’s Republic of China”, “Administrative Penalty Law of the People’s Republic of China”, and “Customs Inspection Regulations of the People’s Republic of China”, this announcement sheds light on specific practices and conditions for import and export enterprises.

I. Exemption from Administrative Penalties

Under the new guidelines, import and export enterprises that proactively disclose violations of customs regulations and rectify them promptly will be granted certain leniencies:

(1) Full exemption from penalties for tax-related violations disclosed to customs within six months of occurrence.

(2) For violations disclosed after six months but within two years, if the underpaid or unpaid taxes amount to less than 30% of the total due or if the sum is below RMB 1 million, penalties won’t be levied.

(3) Violations affecting the state’s export tax refund management are handled as follows:

  • Full exemption for disclosures made within six months.
  • If disclosed after six months but within two years, and the possible over-refund is less than 30% of the refundable tax or below RMB 1 million, no penalties will be imposed.

(4) Processing trade enterprises that, due to technological advancements or inaccurate declarations, have a lower actual consumption than declared will be exempted, provided the remaining materials or products have not been disposed of or have been re-exported via processing trade.

(5) Violations that are rectified promptly without causing harm, as stipulated in Article 15 of the “Implementation Regulations on Administrative Penalties for Customs of the People’s Republic of China”, will be considered for exemption:

  • Violations disclosed before the last day of the month amounting to less than RMB 10 million.
  • If disclosed within three months thereafter, and the violation is below RMB 5 million.

(6) Violations processed according to Article 15 (2) of the aforementioned regulations.

(7) Violations processed under Article 18 of the regulations, without affecting the state’s prohibition management, export tax refund management, tax collection, or permit management.

(8) Violations related to customs inspection and quarantine that can be rectified promptly and have caused no harm (see Annex 1). This excludes quarantine-related matters and inspections regarding safety, environmental protection, and health.

II. Reduction or Exemption of Late Payment Penalties

Import and export enterprises that actively report tax-related violations to customs and rectify them promptly can apply for a reduction or exemption of late payment penalties. Once verified by customs, the appropriate reductions will be granted.

III. Exclusion from Customs Credit Records

Enterprises disclosing violations and receiving a warning or a fine below RMB 1 million will not be included in customs’ credit record. Advanced certified enterprises will not face any suspension of corresponding management measures during the customs investigation, with exceptions for safety, environmental, and health-related inspection issues.

IV. Repeat Offenses and Non-applicability

For the same type of violation (same nature and legal provision) disclosed to customs for the second time or more within a year, the provisions of this announcement will not apply. Similarly, rights holders authorizing multiple rights for the same goods will not benefit from these provisions upon repeated disclosures.

V. Procedure for Voluntary Disclosure

Enterprises disclosing violations must fill out the “Voluntary Disclosure Report Form” (see Annex 2), accompanied by ledgers, documents, and other materials, and report to the customs at the declaration location, actual import/export location, or registered location.

This announcement is effective from October 11, 2023, to October 10, 2025. Concurrently, the General Administration of Customs Announcement No. 54 of 2022 is repealed.

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