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AGREEMENT BETWEEN THE GOVERNMENT OF THE PEOPLE’S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA ON THE PROMOTION AND PROTECTION OF INVESTMENTS

AGREEMENT BETWEEN THE GOVERNMENT OF THE PEOPLE’S REPUBLIC OF CHINA AND THE GOVERNMENT OF THE DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA
ON THE PROMOTION AND PROTECTION OF INVESTMENTS

The Government of the People’s Republic of China and the Government of the Democratic People’s Republic of Korea (hereinafter referred
to as the “Contracting Parties”),

Intending to create favorable conditions for investment by investors of one Contracting Party in the territory of the other Contracting
Party,

Recognizing that the reciprocal encouragement, promotion and protection of such investments will be conducive to stimulating business
initiative of the investors and will increase prosperity in both States,

Desiring to intensify the cooperation of both States on the basis of equality and mutual benefit,

Have agreed as follows:

Article 1

DEFINITIONS

For the purpose of this Agreement.

1.

The term “investment” means every kind of asset invested by investors of one Contracting Party in accordance with the laws and regulations
of the other Contracting Party in the territory of the latter, and in particular, though not exclusively, includes:

(a)

movable and immovable property and other property rights such as mortgages and pledges;

(b)

shares, stocks, debentures and any other kind of participation in companies;

(c)

claims to money or to any other performance having an economic value associated with an investment;

(d)

intellectual property rights, in particular copyrights, patents, trade-marks, trade-names, technical process, know-how and good-will;

(e)

business concessions conferred by law or under contract permitted by law, including concessions to search for, cultivate, extract
or exploit natural resources.

Any change in the form in which assets are invested does not affect their character as an investment.

2.

The term “investor” means:

(a)

natural persons who have nationality of either Contracting Party in accordance with the laws of that Contracting Party;

(b)

economic entities, including companies, associations, partnerships and other organizations, incorporated or constituted under the
laws and regulations of either Contracting Party and have their seats in that Contracting Party.

3.

The term “returns” means the amounts yielded from investments, including profits, dividends, interests, capital gains, royalties and
other legitimate income.

4.

The term “territory” means:

(a)

in respect of the People’s Republic of China , the territorial land and sea, the exclusive economic maritime zones and continental
shelf over which it exercises its sovereign rights or jurisdiction in accordance with its national law and international law.

(b)

in respect of the Democratic People’s Republic of Korea, the territorial land and sea, the exclusive economic maritime zones and continental
shelf over which it exercises its sovereign rights or jurisdiction in accordance with its national law and international law;

Article 2

PROMOTION AND PROTECTION OF INVESTMENT

1.

Each Contracting Party shall encourage investors of the other Contracting Party to make investments in its territory and admit such
investments in accordance with its laws and regulations.

2.

Investments of the investors of either Contracting Party shall enjoy the constant protection and security in the territory of the
other Contracting Party.

3.

Without prejudice to its laws and regulations, neither Contracting Party shall take any unreasonable or discriminatory measures against
the management, maintenance, use, enjoyment and disposal of the investments by the investors of the other Contracting Party.

4.

Subject to its laws and regulations, one Contracting Party shall provide assistance in and facilities for obtaining visas and working
permit to nationals of the other Contracting Party engaging in activities associated with investments made in the territory of that
Contracting Party.

Article 3

TREATMENT OF INVESTMENT

1.

Investments of investors of each Contracting Party shall all the time be accorded fair and equitable treatment in the territory of
the other Contracting Party.

2.

Without prejudice to its laws and regulations, each Contracting Party shall accord to investments and activities associated with
such investments by the investors of the other Contracting Party treatment not less favorable than that accorded to the investments
and associated activities by its own investors.

3.

Neither Contracting Party shall subject investments and activities associated with such investments by the investors of the other
Contracting Party to treatment less favorable than that accorded to the investments and associated activities by the investors of
any third State.

4.

The provisions of Paragraphs 1 to 3 of this Article shall not be construed so as to oblige one Contracting Party to extend to the
investors of the other Contracting Party the benefit of any treatment, preference of privilege by virtue of:

(a)

any customs union, free trade zone, economic union and any international agreement resulting in such customs union, free trade zone
and economic union;

(b)

any international agreement or arrangement relating wholly or mainly to taxation.

Article 4

EXPROPRIATION

1.

Neither Contracting Party shall expropriate, nationalize or take other similar measures (hereinafter referred to as “expropriation”)
against the investments of the investors of the other Contracting Party in its territory, unless the following conditions are met:

(a)

for the public interests;

(b)

under domestic legal procedure;

(c)

without discrimination;

(d)

against compensation

2.

The compensation mentioned in Paragraph 1 of this Article shall be equivalent to the value of the expropriated investments immediately
before the expropriation takes place or the impending expropriation becomes public knowledge, whichever is earlier. The value shall
be determined in accordance with generally recognized principles of valuation. The compensation shall include the interest at a normal
commercial rate from the date of expropriation until the date of payment. The compensation shall also be made without delay, be effectively
realizable and freely transferable.

Article 5

COMPENSATION FOR DAMAGES AND LOSSES

Investors of one Contracting Party whose investments in the territory of the other Contracting Party suffer losses owing to war, a
state of national emergency, insurrection, riot or other similar events in the territory of the latter Contracting Party, shall be
accorded by the latter Contracting Party treatment, as regards restitution, indemnification, compensation and other settlements not
less favorable than that accorded to the investors of its own or any third State.

Article 6

TRANSFER OF INVESTMENTS AND RETURNS

1.

Each Contracting Party shall, subject to its laws and regulations, guarantee to the investors of the other Contracting Party the transfer
of their investments and returns held in its territory, including:

(a)

profits, dividends, interests and other legitimate income;

(b)

proceeds obtained from the total or partial sale or liquidation of investments;

(c)

payments pursuant to a loan agreement in connection with investments;

(d)

royalties in relation to the matters in Paragraph 1 d) of Article 1 ;

(e)

payments of technical assistance or technical service fee, management fee;

(f)

payments in connection with contracting projects;

(g)

earnings of nationals of the other Contracting Party who work in connection with an investment in its territory.

2.

Nothing in Paragraph 1 of this Article shall affect the free transfer of compensation paid under Article 4 of this Agreement.

3.

The transfer mentioned above shall be made in a freely convertible currency and at the prevailing market rate of exchange applicable
within the Contracting Party accepting the investments and on the date of transfer.

Article 7

SUBROGATION

If one Contracting Party or its designated agency makes a payment to its investor under an indemnity given in respect of an investment
made in the territory of the other Contracting Party, the latter Contracting Party shall recognize the assignment of all the rights
and claims of the indemnified investor to the former Contracting Party or its designated agency, by law or by legal transactions,
and the right of the former Contracting Party or its designated agency to exercise by virtue of subrogation the rights and claims
of that investor. The rights and claims by virtue of subrogation shall not exceed the original rights and claims of the investor.

Article 8

SETTLEMENT OF DISPUTES BETWEEN CONTRACTING PARTIES

1.

Any dispute between the Contracting parties concerning the interpretation or application of this Agreement shall, as far as possible,
be settled with consultation through diplomatic channel.

2.

If a dispute cannot thus be settled within six months, it shall, upon the request of either Contracting Party, be submitted to an
ad hoc arbitral tribunal.

3.

Such tribunal shall comprise of three arbitrators. Within two months of the receipt of the written notice requesting arbitration,
each Contracting Party shall appoint one arbitrator respectively. Those two arbitrators shall, within further two months, together
select a national of a third State having diplomatic relations with both Contracting Parties as Chairman of the arbitral tribunal.

4.

If the arbitral tribunal has not been constituted within four months from the receipt of the written notice requesting arbitration,
either Contracting Party may, in the absence of any other agreement, invite the President of the International Court of Justice to
make any necessary appointments. If the President is a national of either Contracting Party or is otherwise prevented from discharging
the said functions, the Member of the International Court of Justice next in seniority who is not a national of either Contracting
Party and is not otherwise prevented from discharging the said functions shall be invited to make such necessary appointments.

5.

The arbitral tribunal shall determine its own procedure. The arbitral tribunal shall reach its award in accordance with the provisions
of this Agreement and the principles of international law recognized by both Contracting Parties.

6.

The arbitral tribunal shall reach its award by a majority of votes. Such award shall be final and binding upon both Contracting Parties.
The arbitral tribunal shall, upon the request of either Contracting Party, explain the reasons of its award.

7.

Each Contracting Party shall bear the costs of its appointed arbitrator and of its representation in arbitral proceedings. The relevant
costs of the Chairman and tribunal shall be borne in equal parts by the Contracting parties.

Article 9

SETTLEMENT OF DISPUTES BETWEEN A CONTRACTING PARTY AND AN INVESTOR OF THE OTHER CONTRACTING PARTY

1.

Any legal dispute between one Contracting Party and an investor of the other contracting Party in connection with an investment in
the territory of the former Contracting Party shall, as far as possible, be settled amicably through negotiations between the parties
to the dispute.

2.

If the dispute cannot the settled through negotiations within six months, the investor may submit the dispute to the competent court
of the Contracting Party in the territory of which the investment has been made.

3.

Any dispute, if unable to be settled within six months after resort to negotiations as specified in Paragraph 1 of this Article, shall
be submitted at the request of either Party to an ad hoc arbitral tribunal, provided that the Contracting Party involved in the dispute
may require the investor concerned to exhaust the domestic administrative review procedure specified by the laws and regulations
of that Contracting Party before submission of the dispute to the above-mentioned arbitration procedure.

However, if the investor concerned has resorted to the procedure specified in Paragraph 2 of this Article, the provision of this Paragraph
shall not apply.

4.

Without prejudice to Paragraph 3 of this Article, the ad hoc arbitral tribunal referred to in Paragraph 3 shall be constituted for
each individual case in the following way: each Party to the dispute shall appoint one arbitrator respectively, and these two shall
select a national of a third State which has diplomatic relations with both Contracting Parties as the Chairman. The first two arbitrators
shall be appointed within two months of the written notice requesting for arbitration by either Party to the dispute to the other
and the Chairman shall be selected within four months.

5.

The ad hoc arbitral tribunal shall determine its own procedure. However, the tribunal may, in the course of determination of procedure,
take as guidance the Arbitration Rules of the United Nations Commission on the International Trade Law (UNCITRAL).

6.

The tribunal referred to in Paragraph 3 of this Article shall reach its award by a majority of votes. Such award shall be final and
binding upon both parties to the dispute. Both Contracting Parties shall commit themselves to the enforcement of the award.

7.

The tribunal referred to in Paragraph 3 of this Article shall adjudicate in accordance with the law of the Contracting Party to the
dispute including its rules on the conflict laws, the provisions of this Agreement as well as the applicable principles of international
law.

8.

Each Party to the dispute shall bear the costs of its appointed arbitrator and of its representation in arbitral proceedings. The
relevant costs of the Chairman and tribunal shall be borne in equal parts by the Parties to the dispute. The tribunal may in its
award direct that a higher proportion of the costs be borne by one of the parties to the dispute.

Article 10

MORE FAVORABLE PROVISIONS AND OTHER OBLIGATIONS

1.

If the legislation of either Contracting Party or international obligations existing at present or established hereafter between the
Contracting Parties result in a position entitling investments by investors of the other Contracting Party to a treatment more favorable
than is provided for by the Agreement, such position shall not be affected by this Agreement.

2.

Each Contracting Party shall observe any commitments it may have entered into with the investors of the other Contracting Party as
regards to their investments.

Article 11

APPLICATION

This Agreement shall apply to all investments, which are made prior to or after its entry into force by investors of either Contracting
Party in accordance with the law and regulations of the other Contracting Party in the territory of latter, but not apply to the
dispute arose before the entry into force of the Agreement.

Article 12

RELATIONS BETWEEN CONTRACTING PARTIES

The provisions of the present Agreement shall apply irrespective of the existence of diplomatic or consular relations between the
Contracting Parties.

Article 13

CONSULTATIONS

1.

The representatives of the Contracting Parties shall hold meetings from time to time for the purpose of:

(a)

reviewing the implementation of this Agreement;

(b)

exchanging legal information and investment opportunities;

(c)

resolving disputes arising out of investments;

(d)

forwarding proposals on promotion of investment;

(e)

studying other issues in connection with investment.

2.

Where either Contracting Party requests consultation on any matter of Paragraph 1 of this Article, the other Contracting Party shall
give prompt response and the consultation be held alternatively in Beijing and Pyongyang.

Article 14

ENTRY INTO FORCE, DURATION AND TERMINATION

1.

This Agreement shall enter into force on the first day of the following month after the date on which both Contracting Parties notify
each other in writing that their respective internal legal procedures necessary for the entry into force of this Agreement have been
fulfilled and remain in force for a period of ten years.

2.

This Agreement shall continue on force if either Contracting Party fails to give a written notice to the other Contracting Party to
terminate this Agreement one year before the expiration of the period specified in Paragraph 1 of this Article.

3.

After the expiration of initial ten years period, either Contracting Party may at any time thereafter terminate this Agreement by
giving at least one year’s written notice to the other Contracting Party.

4.

With respect to investments made prior to the date of termination of this Agreement, the provisions of Article 1 to 13 shall continue
to be effective for a further period of ten years from such date of termination.

IN WITNESS WHEREOF, the undersigned, duly authorized thereto by their-respective Governments, has signed this Agreement.

Done in duplicate, at Beijing on March 22, in Chinese, Korean and English languages, all texts being equally authentic. In case of
divergent interpretation, the English text shall prevail.

For the Government of￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿For the Government of

The People’s Republic￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿The Democratic People’s

Of China￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿￿Republic of Korea



 
The Government of the People’s Republic of China
2005-03-22

 






CIRCULAR OF MOF AND SAT ON ABOLISHING THE MEASURES ON ADMINISTRATING SPECIAL VALUE-ADDED TAX INVOICE ISSUED BY LOCAL TAXATION OFFICE AS AGENCIES OF THE STATE ADMINISTRATION OF TAXATION THROUGH SPECIAL SCRIPT OF TAX

Ministry of Finance, The State Administration of Taxation

Circular of MOF and SAT on Abolishing the Measures on Administrating Special Value-added Tax Invoice Issued by Local Taxation Office
as Agencies of the State Administration of Taxation through Special Script of Tax

Cai Shui [2005] No.43

March 22,2005

To departments (bureaus) of finance and bureaus of state taxation in all the provinces, autonomous regions, municipalities directly
under the Central Government, cities specifically designated in the state plan, financial bureau of Xinjiang Production and Construction
Corporations,

According to The Circular on the Testing Administration Measures on Special Value-added Tax Invoice Issued by Local Taxation Office
as Agencies of the State Administration of Taxation (Guo Shui Fa (2004)No,153) and The Circular on Intensifying the Issues Concerning
the Administration of Special Value-added Tax Invoice Issued by Local Taxation Office as Agencies of the State Administration of
Taxation (Guo Shui Han (2004) No.153), the special value-added invoice issued by local taxation offices an agencies shall be concluded
in the fake-preventing administration system of special value-added tax invoice from the date of January 1, 2005. In order to enhance
the efficiency and simplify the procedure of export tax refund, the exporting goods listed in special value-added tax invoice issued
by local taxation office as agencies through the fake-preventing administration system shall not be supervised under the special
value-added tax (for exporting only) script or exporting goods pay taxes division document (hereinafter referred as special invoice
of value-added tax). Details are notified as follow,

I.

Special script of value-added tax shall not be provided for enterprises when export tax refund is applied, on the condition that the
exporting goods be applied to customs after January 1, 2005(the date on the export customs declaration(on the couplet for export
tax refund only) shall be taken as the actual date of exporting), and that the special value-added invoice be issued by local taxation
offices an agencies under the fake-preventing administration system of special value-added tax invoice(invoice issued by local taxation
offices here and after is prescribed in Article 2 Guo Shui Fa (2004) No.153) after the date of January 1, 2005.

II.

Special script of value-added tax shall not be provided for selected bidders and foreign-ventured enterprises when export tax refund
is applied, on the condition that domestic machinery and electronic products selected in international bidding fare be adopted in
the costs loaned foreign governments and international financial organizations, that domestic equipment be bought by foreign-ventured
enterprises, and that the special value-added invoice be issued by local taxation offices an agencies under the fake-preventing administration
system of special value-added tax invoice after the date of January 1, 2005.

III.

Special script of value-added tax shall be provided, should it be required to be issued by taxation offices at all levels under stipulations,
without any excuses for enterprises on the products exported before January 1, 2005.

IV.

Special invoice of value-added tax applied by exporting enterprises shall be issued by taxation offices under due attestation procedure
of the administration on Special Value-added Tax Invoice Issued by Local Taxation Office as Agencies of the State Administration
of Taxation, and export tax refund application shall not be taken should there is no attestation or the requirement of attestation
is not satisfied.

V.

The relative electronic communication of special invoice of value-added tax shall be adopted by taxation offices when applications
on export tax refund were handed in under Article 1 of this Circular, where Article Six of The Circular on the Administration on
the Offset of Exporting Goods of the State Administration of Taxation (Guo Shui Fa (2004) No.64) shall be applied. Communication
Department and Tax-refund Department of Taxation offices of all levels shall collaborate with each other, with the view to fulfilling
the project of transferring and incepting electronic information of special value-added tax invoice issued by local taxation office
as agencies of the State Administration of Taxation.

This circular is specifically issued.



 
Ministry of Finance, The State Administration of Taxation
2005-03-22

 






THE OFFICIAL REPLY OF THE STATE ADMINISTRATION OF TAXATION TO THE MATTERS RELATING TO THE EXPORT TAX REFUND DECLARATION OF GOODS EXPORTED THROUGH BOUNDED AREA

The State Administration of Taxation

The Official Reply of the State Administration of Taxation to the Matters Relating to the Export Tax Refund Declaration of Goods Exported
Through Bounded Area

Guo Shui Han [2005] No. 255

Bureau of state tax of Xiamen City:

Your Request for Instructions on Matters of Application for Export Tax Refund on Export Goods of Bonded Area (Xia Guo Shui Fa [2004]
No. 194) has been received, the official reply after deliberation is given as follows:

Article 1 of the Circular of the State Administration of Taxation on Certain Matters of Export Tax Refund (Guo Shui Fa [2000] No.165)
prescribes that, with respect to the goods sold to foreign traders by the export enterprise outside the bonded area via bonded area,
the customs of the bonded area shall not issue the customs declaration of export goods for the entrance to the bonded area of goods
(for export tax refund only) until the goods totally depart from the territory. Pursuant to this provision, the customs of the bonded
area shall issue the customs declaration of export goods (for export tax refund only) based on the entering date of the goods into
the bonded area after the goods depart from the territory, which may cause the export enterprise unavailable to export tax refund
(exemption) due to the expiration of duration of refund declaration. In order to solve this problem, the State Administration of
Taxation decides that: with respect to the export goods conforming to the provision of Article 1 of Guo Shui Fa [2000] No. 165,
the export enterprise may declare export tax refund (exemption) based on the export date specified by the customs on the recording
list of the last batch of export goods.

The State Administration of Taxation

March 29, 2005



 
The State Administration of Taxation
2005-03-29

 






NOTICE OF THE STATE ADMINISTRATION OF TAXATION AND THE MINISTRY OF COMMERCE ON THE EXAMINATION AND APPROVAL PROCEDURES OF INCOME TAX REDUCTION AND EXEMPTION FOR TECHNOLOGY IMPORTING ENTERPRISES

State Administration of Taxation, Ministry of Commerce

Notice of the State Administration of Taxation and the Ministry of Commerce on the Examination and Approval Procedures of Income Tax
Reduction and Exemption for Technology Importing Enterprises

Guo Shui Fa [2005] No. 45

To state taxation bureaus and departments of commerce in all provinces, autonomous regions, municipalities directly under the Central
Government, cities specifically designated in the state plan, local taxation bureaus in Guang Dong province, Hai Nan province and
Shen Zhen municipality, the competent departments of commerce in all provinces, autonomous regions, municipalities directly under
the Central Government, cities specifically designated in the state plan and Xinjiang Production and Construction Corps. :

For the purpose of stimulating technology import and standardizing the procedure for income tax reduction and exemption, the procedures
of examination and approval on income tax reduction and exemption for royalties enterprises concerning technology import shall
be clearly stipulated further as following:

1.

The term Technology Import refers to the action of transferring technology through trade, investment, or economic and technological
cooperation from a foreign country to China. For the technology import contracts that comply with relevant regulations, the foreign
enterprise may enjoy the preference of enterprise income tax reduction and exemption.

2.

If the royalties gained from any specific technology provided by a foreign enterprise complies with the stipulations of Item 4,
Paragraph 3, Article 19 of “Law of the People’s Republic of China on Income Tax of Foreign Investment Enterprises and Foreign Enterprises”
and Article 66 of the “Implementation Rules” thereof, providing that the specific technology is advanced or if the technology is
provided with favorable terms, the reduction or exemption shall be reported to every higher administration up to the State Administration
of Taxation, where a final approval shall be obtained.

3.

Foreign enterprise applicants for income tax reduction or exemption should entrust the technology import company to perform the application
procedures. The technology import company should apply for a Letter of Proposal for the Reduction and Exemption of Enterprise Income
Tax at the administrative department where the company’s technology import contract is registered. There shall be two kinds of letter
of proposal: A and B (See Attachment One and Attachment Two for formats). If the technology import contract is included as an attachment
to the foreign investment company’s enterprise contract or charter, the company should apply for Letter B; in the case of other circumstances
the company should apply for letter A. The following materials should be provided at the time of application:

(1)

Photocopy of technology import contract;

(2)

Registration certificate for the technology import contract;

(3)

Data chart for the technology import contract;

(4)

Letter of application for the reduction and exemption of income tax for foreign enterprises;

(5)

Letter of commission from the foreign enterprise to entrust the technology import company to perform the procedures for income tax
reduction and exemption; and

(6)

The application for income tax reduction and exemption submitted by the technology import company;

For those companies whose technology import contract is included as an attachment to the foreign investment company’s enterprise contract
or charter, the approval letter for the contract or charter and the Certificate of approval for foreign investment enterprises or
the Certificate of approval for enterprises invested by Taiwan, Hong Kong or Macao businesses shall be used in lieu of the aforesaid
Registration certificate for the technology import contract to apply for the “Letter of Proposal for the Reduction and Exemption
of Enterprise Income Tax”(Letter B) at the administrative department where the original contract/charter was examined and approved.

4.

After applying for the “Letter of Proposal for the Reduction and Exemption of Enterprise Income Tax”, the technology import company
shall provide other materials listed in Article 3 of this Circular to perform the tax reduction and exemption procedures at the
taxation administrative department.

5.

The competent departments of commerce shall strictly perform the examination and approval procedure in accordance with the Law of
the People’s Republic of China on Income Tax of Foreign Investment Enterprises and Foreign Enterprises and the Implementation Rules
thereof when providing the letter of proposal. If the terms of the technology import contract contain any of the following content,
it shall not be regarded as a contract with “favorable terms” in the eyes of the tax law, and the letter of proposal shall not be
granted in principle:

(1)

Importing restricted technology;

(2)

The contract contains fundamental provisos that are against the regulations of the Regulations of the People’s Republic of China on
Technology Import and Export Management;

(3)

The royalties is paid in the form of commission, and the deduction percentage is higher than 5%.

In cases it is claimed that the contract involves with advanced technology and deserve the letter of proposal, a special explanation
should be attached.

6.

If the State Administration of Taxation has any questions with the letter of proposal provided by the competent departments of commerce
of any of the provinces, autonomous regions, municipalities directly under the Central Government, and cities under separate state
planning , a request for re-examination may be delivered to the Ministry of Commerce.

7.

The Ministry of Commerce is in full charge of the designing of the format for the letter of proposal; the local competent department
of commerce may download the form from the “Laws and Regulations” section at the “Department of Science and Technology” page on the
Ministry of Commerce’s website.

8.

This Notice shall be implemented as of the day of distribution.

Attachments:

1.

Letter of Proposal for the Reduction and Exemption of Enterprise Income Tax (Letter A) (omitted)

2.

Letter of Proposal for the Reduction and Exemption of Enterprise Income Tax (Letter B) (omitted)

State Administration of Taxation

Ministry of Commerce of the People’s Republic of China

March 17, 2005



 
State Administration of Taxation, Ministry of Commerce
2005-03-17

 






ADMINISTRATIVE MEASURES OF THE CUSTOMS OF THE PEOPLE’S REPUBLIC OF CHINA FOR THE TRANSFER OF GOODS FROM AN EXPORT PROCESSING ZONE TO OTHER PLACES FOR DEEP PROCESSING

the General Administration of Customs

Order of the General Administration of Customs of the People’s Republic of China

No. 126

The Administrative Measures of the Customs of the People’s Republic of China for the Transfer of Goods from an Export Processing Zone
to Other Places for Deep Processing were adopted after deliberation at the executive meeting of the General Administration of Customs
on March 9, 2005. They are hereby promulgated and shall go into effect as of May 1, 2005.

Director of the General Administration of Customs Mu Xinsheng

March 21, 2005

Administrative Measures of the Customs of the People’s Republic of China for the Transfer of Goods from an Export Processing Zone
to Other Places for Deep Processing

Article 1

For the purpose of further improving the management of export processing zones, facilitating the production and business operations
of enterprises within the export processing zones, encouraging the expansion of export in foreign trade and promoting the transformation
and upgrading of processing trade, the present Measures are formulated in accordance with the Customs Law of the People’s Republic
of China, Interim Measures for the Supervision of the Customs of the People’s Republic of China over the Export Processing Zones
and other relevant laws and administrative regulations.

Article 2

The phrase “transfer of goods from an export processing zone to other places for deep processing ” shall refer to the business activities
that a processing enterprise in an export processing zone (hereinafter referred to as the transferring enterprise) goes through the
customs declaration formalities in accordance with the Interim Measures for the Supervision of the Customs of the People’s Republic
of China over the Export Processing Zones, transfers the goods processed or manufactured by itself, directly or via a bonded storage
enterprise, to a processing trade enterprise in another export processing zone, bonded zone or any other area subject to the special
supervision of the customs or to an area not subject to the special supervision of the customs (hereinafter referred to as receiving
enterprise) for the purpose of export after further processing.

Article 3

No bonded materials of a transferring enterprise may be transferred out of the export processing zone for deep processing unless they
have been processed substantially.

Article 4

The products processed or manufactured by an enterprise in an export processing zone, which are transferred to an enterprise in another
export processing zone, bonded zone or any other area subject to the special supervision of the customs for the purpose of deep processing,
are not included in the customs’ statistics.

The products processed or manufactured by an enterprise in an export processing zone, which are transferred to a processing trade
enterprise out of the zone for deep processing shall be included in the customs’ statistics under a single item.

Article 5

No receiving enterprise or transferring enterprise, may undertake the transfer of goods from an export processing zone to other places
for deep processing when it is under any of the following circumstances:

(1)

It is ordered by the customs to make rectification within a time limit because it does not meet the supervisory requirements of the
customs, and is in the rectification period;

(2)

It is being investigated by the customs because it is suspected of involving in a case of smuggling, and the case is not concluded
yet;

(3)

It fails to submit its Processing Trade Brochure for verification within the prescribed time limit;

(4)

It is exclusively engaged in maintenance or design and development; and

(5)

Other circumstances under which it fails to meet the supervisory conditions for the transfer of goods for deep processing.

Article 6

With regard to the transfer of the goods of an enterprise in an export processing zone to other places for deep processing, the transferring
enterprise may not transfer the goods until it, upon the strength of the official reply of the administrative committee of the export
processing zone, has gone through the customs registration formalities with the customs of the export processing zone where it is
located.

If the goods is to be transferred to an enterprise in another export processing zone, bonded zone or any other area subject to the
special supervision of the customs, the receiving enterprise shall, upon the strength of the official reply of the administrative
committee of the export processing zone where it is located, go through the formalities for the transfer of goods under the preceding
provisions. If the goods is to be transferred to an processing enterprise not within an export processing zone, bonded zone or any
other area subject to the special supervision of the customs, the receiving enterprise shall, upon the strength of the official reply
of the administrative department of commerce (foreign trade and economic cooperation), go through the formalities for the transfer
of goods under the preceding provisions.

Article 7

With regard to the goods to be transferred to another processing enterprise not within an export processing zone, bonded zone or any
other area subject to the special supervision of customs, the customs shall handle relevant formalities under relevant provisions
on the import goods for processing trade. If the goods to be transferred fall into the catalogue of commodities subject to import
license administration under the processing trade, the enterprise shall provide the customs with the corresponding valid import license.

Article 8

A transferring enterprise or receiving enterprise may go through the formalities for the transfer of goods by way of “delivering goods
in batches and declaring at the customs all at once”.

If the products manufactured by the transferring enterprise are to be transferred to another export processing zone, bonded zone or
any other area subject to the special supervision of the customs, the transferring enterprise and the receiving enterprise shall
respectively go through the formalities for the transfer of goods with competent customs. If the goods is to be transferred to another
processing enterprise not within an export processing zone, bonded zone or any other area subject to the special supervision of the
customs, the transferring enterprise and the receiving enterprise shall go through the formalities for the transfer of goods with
competent customs where the transferring enterprise is located.

Article 9

As to the transfer of goods from an export processing zone to other places, if the goods is to be transferred to another export processing
zone, bonded zone or any other area under the special supervision of the customs, except under special circumstances, the customs
formalities shall be gone through by referring to the relevant provisions on customs change transportation.

If the products manufactured by the transferring enterprise are to be transferred to another export processing zone, bonded zone or
any other area subject to the special supervision of the customs and the formalities for the transfer of goods can’t be handled by
referring to the supervision applicable to the transshipment of goods between different customs houses, the enterprise may complete
the transportation of the goods by itself after it has provided the corresponding guaranty to the competent customs where the transferring
enterprise or receiving enterprise is located.

Article 10

As to the products of an enterprise in an export processing zone to be transferred to a processing enterprise not with an export processing
zone, bonded zone or any other area subject to the special supervision of the customs, the transferring enterprise or receiving enterprise
shall, when it files a transfer plan with the customs, submit the Customs of the People’s Republic of China ?C Application Form for
the Transfer of Goods from an Export Processing Zone to Other Places for Deep Processing (hereinafter referred to as the Application
From, see Annex 1.) and shall faithfully fill out all the items in the Application Form.

An Application Form can be used by only one transferring enterprise and one receiving enterprise, but may correspond to many “Processing
Trade Brochures” of the receiving enterprise.

Article 11

A receiving enterprise or transferring enterprise shall go through the registration formalities for its transfer plan according to
the following requirements:

(1)

The receiving enterprise shall fill its receiving plan in the Application (in quadruplicate), and then shall, upon the strength of
the Application, go through the registration formalities with the customs where the receiving enterprise is located;

(2)

After completing the registration formalities, the customs of the place where the receiving enterprise is located shall keep the first
page of the Application and return the other three pages back to the transferring enterprise via the receiving enterprise;

(3)

The transferring enterprise shall, within 30 days as of the registration with the customs of the place where the receiving enterprise
is located, fill in the relevant contents about the enterprise concerned upon the strength of the other three pages of the Application
Form to complete the registration formalities with the customs of the place where the transferring enterprise is located. If the
contents in the Application Form offered by the transferring enterprise to the customs do not meet the relevant provisions of the
customs, the customs shall, on the spot or within 5 days from receipt of the Application Form, inform the transferring enterprise,
for once, of the items to be supplemented and corrected. If the application is rejected, the customs shall produce and issue the
applicant a Decision on Rejection of Customs Administrative Licensing Application and inform it of the right to apply for administrative
reconsideration or lodge an administrative litigation. The transferring enterprise or receiving enterprise shall file a new application
and go through the registration formalities again; and

(4)

After examination, the customs of the place where the transferring enterprise is located shall keep the second page of the Application
Form, and hand out the third and fourth pages to the transferring enterprise and receiving enterprise. Upon the strength of the third
and fourth page of the Application Form, the receiving enterprise and transferring enterprise shall go through the formalities for
the register of receipt and delivery of the transferred goods as well as the formalities for the customs declaration.

Article 12

After completing the formalities for registering the transfer, a transferring enterprise and receiving enterprise shall deliver and
take the goods according to the Application Form approved by the customs at both the transferring and receiving places. Each batch
of goods consigned by the transferring enterprise shall be faithfully noted down in the Registry Form of the Actual Transfer of Goods
from an Export Processing Zone (in triplicate, hereinafter referred to as the Registry Form. See Annex 2.). The goods may be transferred
out of the export processing zone after the customs notes down the relevant matters in the Register Form at the customs checkpoint
of the transferring place.

Article 13

After a transferring enterprise or receiving enterprise actually delivers or receives a batch of goods, it may, upon strength of the
Application Form and the Registry Form with the relevant matters noted down by the customs at the customs checkpoint of the transferring
place, go through declaration formalities with the customs for a single batch or for all batches. The transferring enterprise or
receiving enterprise shall, after the actual delivery or receipt of every batch of goods, go through the declaration formality for
the said batch of goods within 30 days as of the actual delivery or receipt of every batch of goods.

One bill of entry for the transfer of goods shall correspond to one export bill. The transferring enterprise or receiving enterprise
shall, under the provisions of the customs, faithfully and accurately declare to the customs the name of the goods being transferred,
serial number of the commodity, specification, quantity, price, etc. The customs at the transferring place or receiving place shall
verify the declared data.

Article 14

In case the goods that are transferred out of the export processing zone are returned or returned to the transferring export processing
zone for replacement due to inconformity with the quality as required or for any other reason, if the receiving enterprise is a processing
trade enterprise not within an export processing zone, bonded zone or any other area subject to the special supervision of the customs,
the competent customs at the transferring place shall handle the relevant formalities according to relevant provisions on the return
or return for replacement, shall note down the relevant information about the actual return or return for replacement in the Registry
Form and give a clear indication of “Return” or “Return for Replacement”. If the receiving enterprise is an enterprise in another
export processing zone, bonded zone or any other area subject to the special supervision of the customs, the receiving enterprise
and transferring enterprise shall go through the relevant formalities in the local competent customs respectively.

In case the goods that are transferred out of an export processing zone are necessary to be returned for maintenance due to inconformity
with the quality as required or for any other reason, the relevant formalities shall be gone through by referring to the provisions
on the return for replacement.

Article 15

A transferring enterprise shall uniformly issue export invoices for the goods that are transferred out of an export processing zone
for deep processing. The receiving enterprise and transferring enterprise shall make settlement in foreign currency, and the customs
shall, in accordance with relevant provisions, issue a Certification Page of the Customs Declaration for Export Proceeds in Foreign
Exchange.

Article 16

All the goods that are transferred out of an export processing zone for deep processing shall be processed and exported. For a special
reason, if it is really necessary to sell the goods within China or use the goods for producing products to be sold within China,
the processing enterprise not within an export processing zone shall go through the formalities under the relevant provisions of
the state.

Article 17

An enterprise that adopts computer network management may go through the formalities for the transfer of goods through the computer
network.

Article 18

Where a receiving enterprise or transferring enterprise violates the present Measures, it shall be punished in accordance with the
Customs Law of the People’s Republic of China and the Regulation on the Implementation of the Administrative Penalties under the
Customs Law of the People’s Republic of China. If a crime is constituted, it shall be prosecuted for criminal liabilities according
to law.

Article 19

The power to interpret the present Measures shall be vested in the General Administration of Customs.

Article 20

The present Measures shall go into effect as of May 1, 2005.

Annexes:

1.

The Customs of the People’s Republic of China ?C Application for the Transfer of the Goods from an Export Processing Zone to Other
Places for Deep Processing (Omitted)

2.

Registry Form of the Actual Transfer of Goods from an Export Processing Zone (Omitted)



 
the General Administration of Customs
2005-03-21

 






CONSTITUTION ACT, 1982 – page 22

NOTES (1) The enacting clause was repealed by the Statute Law Revision Act, 1893, 56-57 Vict., c. 14 (U.K.). It read as...

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

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