Ⅰ. Policy Innovation

From the effective date of being qualified as general VAT taxpayers, pilot enterprises shall comply with tax policies as follows:

1. Self-use equipment (including machines, capital goods, and office supplies) imported by pilot enterprises shall be temporarily exempted from import duties, import VAT, and import consumption tax (hereinafter collectively referred to as "import taxes").

The above-mentioned temporarily exempted import taxes shall be allocated evenly across each year in accordance with the customs supervision period of the equipment. By the end of each year, the temporarily exempted import taxes shall be divided according to the ratio of domestic and overseas sales. The portion based on overseas sales shall be subject to the tax policies for special customs supervision zones where the pilot enterprises are located, while for domestic sales taking place outside special customs supervision areas, the temporarily exempted import taxes shall be recaptured and levied accordingly.

2. In addition to imported self-use equipment, bonded policies shall apply to:

1) goods purchased from overseas into pilot zones;

2) bonded goods purchased into pilot zones from areas under special customs supervision (pilot zones excluded) or customs-bonded supervision areas;

3) bonded goods purchased from non-pilot enterprises in pilot zones;

4) unprocessed bonded goods purchased from other pilot enterprises in pilot zones.

3. Pilot enterprises shall declare and pay VAT and consumption tax to the competent tax authorities when selling following goods:

1) goods to non-bonded areas in the Chinese mainland;

2) goods to bonded zones and bonded supervision areas without tax-refund function (except for unprocessed bonded goods);

3) goods to other pilot enterprises in pilot zones (except for unprocessed bonded goods).

If bonded goods are included in the above-mentioned goods sold by pilot enterprises, the enterprises shall declare the goods and pay import taxes to the customs based on the bonded goods' conditions when entering special customs supervision zones. Interest on deferred tax payments shall be paid in accordance with regulations.

4. Bonded policies shall continue to apply to unprocessed bonded goods sold to special customs supervision zones or customs bonded supervision areas.

5. Export tax refund and exemption policies shall apply to the following goods (except for unprocessed bonded goods). The competent tax authorities shall review and handle the export tax refund and exemption claims submitted by pilot enterprises based on the digital declaration forms provided by the customs for corresponding exported goods.

1) Goods exported overseas;

2) Goods sold to special customs supervision zones (except for pilot zones and bonded zones) or customs bonded supervision areas (except for bonded supervision areas without tax-refund function);

3) Goods sold to non-pilot enterprises in pilot zones.

6. VAT and consumption tax exemptions shall apply to overseas export of unprocessed bonded goods.

7. Unless otherwise specified by the Ministry of Finance of the People's Republic of China, the General Administration of Customs of the People's Republic of China, and the State Taxation Administration of the People's Republic of China, the pilot enterprises shall comply with existing laws, regulations, and other provisions on custom duties, VAT, and consumption tax applied in non-bonded areas.

Ⅱ. Policy Basis

Announcement on Promoting Pilot Program for General Value-Added Tax Taxpayer Qualification in Comprehensive Bonded Zones (Announcement by the Ministry of Finance of the People's Republic of China, General Administration of Customs of the People's Republic of China, and State Taxation Administration of the People's Republic of China, [2019] No. 29)

Ⅲ. Scope of Application

Enterprises in CBZs that meet the requirements for general VAT taxpayer registration fall within the scope.

Ⅳ. Eligibility

Enterprises in CBZs that meet the requirements for general VAT taxpayer registration may voluntarily apply to their local customs and tax authorities to become pilot enterprises. Upon approval, they must register as general VAT taxpayers with the competent tax authorities in accordance with applicable regulations.