Circular of the State Economic and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation, the General Administration of Customs, People's Bank of China, the State Administration of Foreign Exchange, Bank of China on Printing and Distributing the Implementation Measures Concerning Processing Trade Enterprises Providing Tax Guarantee in Various Forms

GuoJingMaoMaoYi [1999] No.1271 December 29, 1999

Trade and economic commissions (economic commissions, planning and economic Commissions), commissions (departments and bureaus) of foreign trade and economic cooperation of the various provinces, autonomous regions, municipalities directly under Central Government, municipalities separately listed on the State plan and Xinjiang Production and Construction corps, Guangdong Sub-Administration of the General Administration of the Customs, various customs directly under the General Administration of Customs, branches of the People's Bank of China, sub-bureaus of the State Administration of Foreign Exchange, branches of the Bank of China, and relevant institutions of the State Council:

In order to implement the Circular of the General Office of the State Council on Transmitting the Circular of the State Economic and Trade Commission and other Departments on Further Improving the Machine Account System of Bank Guaranty funds for Processing Trade (GuoBanFa [1999] No. 35) and the Circular of the General Office of the State Council on Transmitting the Opinions of the MOFTEC Concerning Taking Further Measures to Stimulate and Expand Export (GuoBanFa [1999] No. 71), the State Economic and Trade Commission, the MOFTEC, the General Administration of the Customs, the People's Bank of China, the State Administration of Foreign Exchange and the Bank of China drafted Implementation Measures Concerning Processing Trade Enterprises Paying Tax Guarantee in Various Forms. In accordance with the Customs Law of the People's Republic of China, the Guarantee Law of the People's Republic of China and other relevant laws and regulations. The Implementation Measures states, financial institutions confirmed by the General Administration of Customs to be qualified to provide guarantee to other institutions, or other legal entities that are capable of liquidating in other institutions' place (hereinafter simplified as guarantee institutions), can provide guarantee to the Customs for processing trade enterprises. Now, the Bank of China is confirmed by the General Administration of Customs and the People's Bank of China as the financial institution that provides guarantee to processing trade. This Measure is applicable to other guarantee institutions upon confirmation of their qualification.

The Implementation Measures Concerning Processing Trade Enterprises Paying Tax Guarantee Fund in Various Forms hereby printed and distributed to you.These Measures shall come into force on January 1, 2000.

Attachment:

Implementation Measures Concerning Processing Trade Enterprises Paying Tax Guarantee Fund in Various Forms

Article 1 In order to perfect the machine account system of bank guarantee funds of processing trade, enterprises that deal with operations of processing trade (hereinafter simplified as "enterprises") are allowed to pay Customs tariff and other tax guarantee funds (herein after simplified as "tax guaranty funds") to the Customs in various forms, these measure are drafted in accordance with the Customs Law of the People's Republic of China and the Guarantee Law of the People's Republic of China.

Article 2 In case that enterprises in processing trade can not pay tax guarantee funds to the Customs due to some reasons, these enterprises can go through Customs filing procedures by presenting the Letter of Tax Payment Guarantee issued by the Bank of China in favor of the Customs. Letter of Tax Payment Guarantee and Letter of Claim are attached hereafter.

Article 3 Following agencies of the Bank of China can issue letters of guarantee to the Customs upon self-evaluation according to credit standing of enterprises:

1. Business department in the head office of the Bank of China;

2. Branches of various provinces, autonomous regions and municipalities directly under the Central Government;

3. Shenzhen Branch of the Bank of China;

4. Branches in Zhuhai, Shantou, Suzhou, Wusi, Ningbo, Xiamen and Shenyang.

Article 4 Funds guaranteed by the Bank of China include taxes and interests. Taxes refer to tariffs due by enterprises to the Customs and other taxes confirmed by the Customs. Interests and interest rates are subject to relevant Customs regulations.

Article 5 The guarantee is valid till 60 days after the verification period of machine account is due.

Article 6 Within the guarantee validity, in case the value of processing contract increases or extension of contract occurs, enterprises should first apply to the Bank of China for handling according to procedures concerning increasing value of the letter of guarantee and contract extension and then go through procedures of machine account alteration with the Customs and the Bank of China. In order to simplify formal procedures, the value of the letter of guarantee issued by the Bank of China may exceed the value of guarantee funds upon application of the enterprise.

Article 7 For enterprises to which laws, regulations and this Measure are applicable, according to Contact Sheet of Establishment of Machine Account of Bank Guarantee Funds and Contact Sheet of Alteration of Machine Account of Bank Guarantee Funds issued by the Customs, the Bank of China will conduct evaluation on the credits of enterprises, and various forms of guarantee provided by enterprises, such as guarantee, mortgage, hypothecation, retention and down payment (including funds in foreign exchange owned by enterprises and guarantee funds provided by other nonfinancial guarantors). If evaluation demonstrates that enterprises meet requirements of risk control, the Bank of China will issue the Letter of Tax Payment Guarantee in favor of the Customs and transfer the document to relevant machine account units. The Bank of China may refuse to handle cases of enterprises that are not in accordance with the State laws, regulations and this Measure.

Article 8 Upon receipt of the Letter of Guarantee for Machine Account Payment of Bank Guaranty Funds issued by branches of the Bank of China upon empowerment of BOCL/G Department, BOC business units handling machine accounts will issue Registration Advice Note of Machine Account of Bank Guarantee Funds or Alteration Advice Note of Machine Account of Bank Guarantee Funds. Enterprises can conduct filing procedures of processing trade contracts by presenting the above two Advice notes and the Letter of Payment Guarantee.

Article 9 Within the guarantee validity, guarantee obligations of the BOC will be automatically terminated on condition that enterprises have duly implemented contracts or submit taxes due. Within the guarantee validity, in case that enterprises have not fully or partially perform export obligations, the Customs should issue Letter of Claim and payment Letter exclusively used by Customs to the Bank of China in accordance with the amount of overdue tax and interest rates of postponed tax (if imported materials and components are not allowed for domestic sales, a special Advice Note for Tax Payment, Collection, Deduction and Transfer should be issued.). The Bank of China will perform compensation obligations stated in the letter of guarantee with the above documents. After performed compensation obligations duly, the Bank of China can conduct the right of recourse upon entites guaranteed.

Article 10 The Machine Account Communication System currently existing between the Customs and the Bank of China remains unchanged. Issues concerning machine account of bank guaranty funds will be handled by the Customs and the Bank of China in accordance with Circular on Printing and Distributing Detailed Regulations of Implementation of Contact and Cooperation Measures Concerning the Actual Transfer of Machine Account Guaranty Funds (ZhongYinFa [1999] No. 89) and various regulations concerned.

Article 11 Enterprises that have not obtained the Letter of Tax Payment Guarantee issued by the Bank of China should pay the tax guarantee funds in forms of cash, girocheque, draft, remittance and so on, so forth.

Article 12 These measures shall enter into force from January 1, 2000. Detailed Regulations of Implementation will be drafted and issued by the General Administration of Customs and the Bank of China.

Attachment:

1. Letter of tax payment guarantee (omitted)

2. Letter of claim(omitted)

Promulgated by The State Economic and Trade Commission, the Ministry of Foreign Trade and Economic Cooperation, the General Administration of Customs, People's Bank of China, the State Administration of Foreign Exchange, Bank of China on 1999-12-29