Measures of the Customs of the People's Republic of China for the Determination of the Customs Value of Imported and Exported Goods (2013)

Measures of the Customs of the People's Republic of China for the Determination of the Customs Value of Imported and Exported Goods (2013) Order of the General Administration of Customs (No. 213) The Measures of the Customs of the People's Republic of China for the Determination of the Customs Value of Imported and Exported Goods , as deliberated and adopted at the executive meeting of the General Administration of Customs on December 9, 2013, are hereby issued, and shall come into force on February 1, 2014. Director: Yu Guangzhou December 25, 2013 Measures of the Customs of the People's Republic of China for the Determination of the Customs Value of Imported and Exported Goods Chapter I General Provisions Article 1 To correctly determine the customs value of imported and exported goods, these Measures are developed in accordance with the Customs Law of the People's Republic of China (hereinafter referred to as the “ Customs Law ”) and the Regulation of the People's Republic of China on Import and Export Duties . Article 2 The Customs shall determine the customs value of imported and exported goods under the principles of neutrality, fairness, and uniformity. Article 3 The Customs shall determine the customs value of imported and exported goods under these Measures. These Measures shall not apply to the determination of the customs value of bonded goods for domestic sale, the determination of the customs value of luggage and effects of travelers entering China, personal postal articles, and other articles for personal use as permitted to be imported, and the assessment of the dutiable value of imported and exported goods and articles involved in smuggling. Article 4 The Customs shall, according to the relevant provisions of the state, carefully preserve information provided by taxpayers which involves any trade secrets, and may not provide such information to anyone else except as otherwise provided for by laws and administrative regulations. Taxpayers may request in writing the Customs to keep their trade secrets, specifying what need to be kept confidential, but may not refuse to provide relevant information to the Customs by reason of trade secrets. Chapter II Customs Value of Imported Goods Section 1 Methods for Determining the Customs Value of Imported Goods Article 5 The customs value of imported goods shall be determined by the Customs on the basis of the transaction value of the imported goods, including the cost of transport and associated charges and insurance of the goods before the unloading of the goods at the port of entry in the territory of the People's Republic of China. Article 6 Where the transaction value of imported goods does not comply with the provisions of Section 2 of this Chapter or cannot be determined, the Customs shall determine the customs value of the goods by the following methods in a sequential order after gathering relevant information and consulting with taxpayers regarding value: (1) Valuation method based on transaction value of identical goods. (2) Valuation method based on transaction value of similar goods. (3) Deductive method. (4) Computed value method. (5) Reasonable means. Taxpayers may, after providing relevant information to the Customs, request that the applicable order of items (3) and (4) in the preceding paragraph be reversed. Section 2 Valuation Method Based on Transaction Value Article 7 The transaction value of imported goods is the total price actually paid and payable by the buyer to the seller for the sale of the goods for export to the territory of the People's Republic of China as adjusted under the provisions of Section 3 of this Chapter, including amounts directly and indirectly paid. Article 8 The transaction value of imported goods shall meet the following conditions: (1) There are no restrictions as to the disposal or use of the goods by the buyer, other than restrictions which are imposed by laws and administrative regulations, limit the geographic area in which the goods may be resold, or do not substantially affect the value of the goods. (2) The price of the imported goods is not subject to some condition or consideration for which the transaction value of the goods cannot be determined. (3) No part of the proceeds of any subsequent resale, disposal, or use of the goods by the buyer shall accrue directly or indirectly to the seller, unless an adjustment can be made under item (4), paragraph 1, Article 11 of these Measures. (4) The buyer and the seller are not related, or where the buyer and the seller are related, the transaction value is not affected under the provisions of Articles 17 and 18 of these Measures. Article 9 Under any of the following circumstances, it shall be deemed that there is an restriction as to the disposal or use of the goods by the buyer: (1) The imported goods may only be used for exhibition or as gift. (2) The imported goods may only be sold to a designated third person. (3) The imported goods may only be sold to the seller or a designated third person after processing into finished products. (4) Other restrictions as to the disposal or use of the goods by the buyer, as determined by the Customs upon examination. Article 10 Under any of the following circumstances, the price of the imported goods shall be deemed subject to some condition or consideration for which the transaction value of the goods cannot be determined: (1) The price of the imported goods is established on condition that the buyer will also buy other goods in specified quantities from the seller. (2) The price of the imported goods is established on condition that the buyer also sells other goods to the seller. (3) The price of the imported goods is otherwise subject to some condition or consideration for which the transaction value of the goods cannot be determined, as determined by the Customs upon examination. Section 3 Adjustments to Transaction Value Article 11 Where the customs value of imported goods is determined on the basis of transaction value, the following costs or values not included in the price actually paid or payable for the imported goods shall be included in the customs value: (1) The following costs incurred by the buyer: (a) Commissions and brokerage, except buying commissions. (b) The cost of containers which are treated as being one with the goods in question. (c) The cost of packing whether for labor or materials. (2) The value, apportioned as appropriate, of the following goods and services where supplied by the buyer free of charge or at reduced cost for use in connection with the production and the sale for export to the territory of the People's Republic of China of the imported goods: (a) Materials, components, parts, and similar items incorporated in the imported goods. (b) Tools, dies, moulds, and similar items used in the production of the imported goods. (c) Materials consumed in the production of the imported goods. (d) Engineering, development, artwork, design work, plans and sketches, and other relevant services undertaken outside China necessary for the production of the imported goods. (3) Royalties and license fees which the buyer must pay, directly or indirectly, to the seller or the relevant party, except under either of the following circumstances: (a) The royalties and license fees are not related to the goods. (b) The payment of the royalties and license fees is not a condition for the sale of the goods for export to the territory of the People's Republic of China. (4) The value of any part of the proceeds of any subsequent resale, disposal, or use of the goods by the buyer after importation which accrues directly or indirectly to the seller. Taxpayers shall provide the Customs with objective and quantifiable data on the aforesaid costs or values. If taxpayers are unable to provide such data, the Customs shall, after consultation with taxpayers regarding value, determine the customs value by methods set out in Article 6 of these Measures. Article 12 In the determination of the value of goods which shall be included in the customs value of the imported goods under item (2), paragraph 1, Article 11 of these Measures, the relevant costs shall be computed by the following methods: (1) The value which shall be included is the purchase price, if the buyer purchases them from a third person not related to the buyer. (2) The value which shall be included is the cost of production, if they are produced by the buyer or acquired by the buyer from a third person related to the buyer. (3) The value which shall be included is the buyer's cost of lease, if the buyer acquires them by leasing. (4) The value of tools, dies, moulds, and similar items used in the production of imported goods shall include their engineering, development, artwork, design work, plans and sketches, and other costs. If the goods had been previously used by the buyer before being supplied to the seller, the value which shall be included is the value of the goods after depreciation under domestic generally accepted accounting principles. Article 13 Royalties and license fees meeting any of the following conditions shall be deemed to be related to the imported goods: (1) The royalties and license fees are paid for any patent right or right to use know-how, and the imported goods fall under any of the following circumstances: (a) The goods contain the patent or know-how. (b) The goods are produced by the patented method or know-how. (c) The goods are specially designed or manufactured for implementing the patent or know-how. (2) The royalties and license fees are paid for any trademark right, and the imported goods fall under any of the following circumstances: (a) The goods bear the trademark. (b) The goods may be directly sold after importation if bearing the trademark. (c) The goods contain the trademark right at the time of importation, and may be sold after minimal processing if bearing the trademark. (3) The royalties and license fees are paid for any copyright, and the imported goods fall under either of the following circumstances: (a) The goods contain software, words, music, graphics, images, or other similar works in a form such as magnetic tape, magnetic disk, compact disc, or other similar medium. (b) The goods contain other works with copyright. (4) The royalties and license fees are paid for the right to distribute or resell or other similar right, and the imported goods fall under either of the following circumstances: (a) The goods may be directly sold after importation. (b) The goods may be sold after minimal processing. Article 14 Where the imported goods cannot be purchased by the buyer or cannot be purchased on the agreed terms and conditions of the contract if the buyer fails to pay royalties and license fees, the payment of royalties and license fees shall be deemed a condition for the sale of the imported goods for export to the territory of the People's Republic of China. Article 15 The customs value of imported goods shall not include the following charges or costs distinguished from the price of the imported goods: (1) Charges for construction, erection, assembly, maintenance, or technical assistance undertaken after importation on imported goods such as industrial plants, machinery, or equipment, except warranty cost. (2) The cost of transport and associated charges and insurance of imported goods after the unloading of the goods at the port of entry in the territory of the People's Republic of China. (3) Import duties, taxes collected by the Customs vicariously at the time of importation, and other national taxes. (4) Charges paid for the reproduction of imported goods within China. (5) Expenses for domestic and overseas technical training and overseas business tour. Interest expenses meeting all of the following conditions shall not be included in the customs value: (1) The interest expenses are incurred by the buyer on financing for purchasing the imported goods. (2) There is a written financing agreement. (3) The interest expenses are distinguished. (4) The taxpayer is able to prove that the interest rate adopted is not higher than the interest rate generally available for local similar transactions at that time and the value of identical or similar imported goods without any financing arrangements closely approximates to the value paid or payable for the imported goods. Section 4 Related Persons Article 16 Under any of the following circumstances, the buyer and the seller shall be deemed to be related: (1) They are members of the same family. (2) They are officers or directors of each other's businesses. (3) One is directly or indirectly controlled by the other. (4) Both the seller and the buyer are directly or indirectly controlled by a third person. (5) Together they directly or indirectly control a third person. (6) One directly or indirectly owns, controls, or holds 5% or more of the outstanding voting stock or shares......