[Effects on Processing Trade]

With respect to processing trade, it's assumed that imported raw materials are subsequently to be exported to foreign countries. In this case, the original effects of processing trade is that duty payment such as customs duty is retained at the point of importing raw materials, and possible duty exemption for said materials is determined only in the case where finished products undergoing due procedures were exported.

The effects of processing trade are different depending on ① whether relevant item is subject to the regulations of processing trade(the categories of permission, restriction and prohibition), and ② the grade of relevant enterprises.

■ Financial Effects

☉ Permitted items for processing trade

Reserves to pay customs duty, etc. at the time of import, and determination to exempt duty at the time of export

☉ Restricted items for processing trade

Reserves to pay customs duty, etc. at the time of import, and determination to exempt duty at the time of export

Items restricted for processing trade is different from permitted items only about whether deposit account is opened, and the security needs to be deposited, but processing trade itself isn't prohibited for such restricted items. Accordingly, financial effects also are in line with those of permitted items.

☉ Prohibited items for processing trade

Payments of customs duty, etc. at the time of export, and drawback unavailable at the time of export

■ Processing trade and bank deposit etc.

In the table below, you can determine on whether to open deposit account and whether security deposit is required, based on classified grade of processing enterprises and possibility of processing trade for relevant item.

1. Principle

※ Division of areas

East area: Beijing, Tianjin, Shanghai and Provinces of Liaoning, Hebei, Shandong, Jiangsu, Zhejiang, Fujian, Guangdong.

West area: central and western regions except above east area

※ Processing trade deposit system refers to a system under which the security is deposited as payment guarantee for customs duty, value added tax, etc. at the time of importing raw materials, and such security may be returned at the time of exporting finished products. In the event where such finished products are exported to domestic country without being exported to abroad, or they fail to be exported within a fixed period, customs duty referred needs to be paid from such security preferentially.

2. Exception : Small amounts of materials, etc.