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Notice of State Administration of Foreign Exchange (SAFE) on Issuing the Management Measures for Foreign Exchange in the Free Trade Zone under the Customs' Supervision

Branches and foreign exchange management departments of the State Administration of Foreign Exchange in all provinces, autonomous regions and municipalities directly under the Central Government and branches in Shenzhen, Dalian, Qingdao, Xiamen and Ningbo:

 

I.                    To meet the requirements of further expansion and transformation of the bonded supervision function and facilitate trade and investment of enterprises in the Zone, after consulting the State Administration of Taxation and General Administration of Customs, the SAFE has formulated Management Measures for Foreign Exchange in the Free Trade Zone under the Customs’ Supervision (See Appendix, hereinafter referred to as Measures). The Measures have integrated many foreign exchange management policies currently applicable in various bonded supervision areas, adjusted inconsistent policy details beyond foreign exchange purchase and foreign exchange settlement both in and out bonded supervision areas, subject to some sustained preferential policies, and further streamlined payment verification procedures. The following is the Measures for your implementation with details on foreign exchange accounts of enterprises export processing areas:The enterprises that have opened foreign exchange accounts in the export processing areas shall adjust account nature and number before execution hereof on approval of the branches and sub-branches of the State Administration of Foreign Exchange (hereinafter referred to as SAFE) in accordance with the regulations of these Measures. Funds in the original foreign exchange accounts shall be transferred to the newly opened appropriate accounts on verification by SAFE.

In examining the funds nature declared by the enterprises, SAFE shall accurately grasp enterprise funds’ nature without confusion in consideration of settlement of exchange for capital, foreign debts, remittance and loans both at home and aboard of the enterprises.

 

II. On receipt of these Measures, branches and foreign exchange management departments of SAFE shall timely forward the same among the sub-branches and various bonded supervision area management institutions, banks, enterprises, etc. Please promptly feedback any problems arising from the implementation to the Comprehensive Department of SAFE.

 

Contact: Jing Qin and Xu Weigang

 

Telephone: 68402429, 68402238 Fax: 68402430

 

Appendix: 1. Management Measures for Foreign Exchange in the Free Trade Zone under the Customs’ Supervision

 

2. Names of annulled documents after execution of Management Measures for Foreign Exchange in the Free Trade Zone under the Customs’ Supervision

 

August 15, 2007

 

  Appendix: 1. Management Measures for Foreign Exchange in the Free Trade Zone under the Customs Supervision

  

Article 1 To improve and ensure foreign exchange management and healthy development of the bonded supervision areas, these Measures are formulated in accordance with Foreign exchange Management Regulations of People’s Republic of China and other applicable laws and regulations.

 

Article 2 The Bonded Supervision Area mentioned in the Measures (hereinafter referred to as the Area) includes free trade zones, export processing zones, bonded logistics parks, the bonded ports, as well as comprehensive free trade zones, cross-border industrial zones and other special areas that adopt closed supervision by the customs.

 

Article 3 SAFE and its branches (hereinafter referred to as SAFE) shall supervise and manage by law foreign exchange accounts, foreign exchange receipts and disbursements, purchase of foreign exchange, foreign exchange settlement, etc. of the institutions in the Area.

 

The institutions in the Area include administration, enterprises, public institutions and other economic organizations.

 

Article 4 On receipt of industrial and commercial business license, the enterprises in the Area shall collectively go through foreign exchange registration procedures at the foreign exchange department at the host area according to the applicable regulations.

 

For foreign exchange receipt and disbursement business, the enterprises in the Area shall submit foreign exchange registration certificates and conduct according to valid certificates and commercial documents.

Article 5 Economic communications between the Area and the outside borders shall be priced and settled by foreign currency, unless stipulated otherwise.

 

The transactions under the goods trading between the Area and the regions out of the bonded supervision areas in China (hereinafter referred to as “outside the Area in China”) may be priced and settled by RMB or any foreign currency; the pricing and settlement currency of the incidental charges under the goods trading shall follow the commercial practice; the transactions under service trading shall be priced and settled by RMB.

 

Transactions between institutions in the Area may be settled by RMB and any foreign currency; all set-fees charged by the administrative institutions in the Area shall be priced and settled by RMB.

 

Article 6 For funds receipt and payment between the Area and the outer borders, the institutions in the Area shall conduct international receipt and payment statistics declaration according to the regulations; and institutions between the Area and other regions in China need not to conduct international receipt and payment statistics declaration.

 

Article 7 Enterprises in the Area shall open, use and close foreign exchange accounts according to foreign exchange management regulations in the regions outside of the Area in China.

 

The foreign exchange accounts of the enterprises in the Area shall be incorporated into the foreign exchange account management system for management.

 

Article 8 For goods trade foreign exchange receipt and payment of enterprises in the Area, various foreign exchange management policies shall be implemented according to the customs supervision means linked to goods bonded patterns.

 

The enterprises in the Area engaged in goods trade operation activities after foreign trade operation right have gone through filing and registration with the commerce management authorities shall go through “Name List of Importing Units of Foreign Payment and export foreign exchange receipt cancellation after verification with the local SAFE according to applicable regulations out of the Area but in China.

 

Article 9 To pay goods price to the enterprises overseas or out of the Area but in China, enterprises in the Area shall apply to the bank for handling with valid certificates and commercial documents proved legal and true in one of the following situations.

 

(1)     Payment can be made from the foreign exchange accounts or foreign exchange purchase to the outside borders for direct import from outside borders or purchase goods from enterprises out of the Area but in China.

(2)     The overseas payment can be made through transfer from the enterprises in the Area, on receipt of foreign exchange, to the enterprises out of the Area with the same currency in case of export contract signed with the overseas enterprises and customs declaration and exit by enterprises out of the Area but in China.

(3)     Payment may be directly made for purchase of goods from the enterprises out of the Area but in China, for which the bank will process foreign exchange settlement or entry for the enterprises out of the Area but in China according to applicable regulations.

(4)     Other payment to the enterprises overseas or out of the Area but in China.

 

Remote payment for goods by enterprises in the Area on the “Name List of Importing Units with Foreign Exchange Payment” shall file for handling payments for imports according to applicable regulations.

 

Article 10 Unless stipulated otherwise by these Measures, to make payment to the overseas enterprises, the enterprises in the Area need not to conduct payment for imports cancellation after verification.

 

In the event that the enterprises in the Area make payment to the overseas enterprises with imported goods declaration form or foreign exchange purchase of entry filling list, and the payment bank shall make cancellation after verification of electronic original accounts, case closure and other procedures according to applicable regulations.

 

To purchase foreign exchange and make payment to the overseas enterprises other than cash on delivery, the enterprises in the Area shall submit the original imported goods declaration form or entry filling list to the payment bank within the required time, and the bank shall process relevant procedures according to the preceding paragraph. In case of failure to of submission within the required time, the  payment bank shall report within 3 working days after the end of each quarter the list of enterprises in the Area to the local foreign exchange department, which will examine the truthfulness of foreign exchange receipts and payments case by case.

 

Article 11  When the enterprises in the Area export goods aboard and file the export at the customs for bonded outbound goods, the enterprises need not cancel export foreign exchange receipt after verification; for declaration of the non-bonded goods at the customs, the enterprises in the Area shall cancel export foreign exchange receipt after verification at the local foreign exchange department according to applicable regulations out of the Area but in China..

 

Article 12 For transactions between enterprises within the Area, payment shall be made by RMB or from their foreign exchange accounts through valid certificates and commercial documents proved legal and truthful by contracts or agreements, invoices, etc.

Article 13 To purchase goods from the Area, the enterprises out of the Area but in China may make payment to enterprises in the Area, directly to the outside borders and to other enterprises with property in goods out of the Area but in China through valid certificates and commercial documents. On receipt of the foreign exchange from enterprises out of the Area but in China, enterprises with property in goods shall conduct cancellation after verification by notice for account, foreign exchange settlement bank receipt or other certificates according to applicable regulations

 

Article 14 The current foreign exchange income settlement and the purchase & payment under the service trade of the enterprises in the Area shall be conducted according to applicable regulations out of the Area but in China.

Article 15 The foreign exchange transactions under the capital entry of the institutions within the Area shall be conducted in accordance with the applicable regulations out of the Area but in China.

 

The assets received by the foreign investors for institutions’ clearance in the Area can be remitted overseas or reinvested within China on approval of SAFE; the assets received by the Chinese investors shall timely be transferred back out of the Area but in China according to applicable regulations.

 

Article 16 After conducting foreign exchange purchase or foreign exchange settlement procedures for enterprises in the Area, the bank shall note in relevant columns of the foreign exchange registration certificate and reserve related certificates and commercial documents for future reference according to applicable regulations.

 

Article 17 The SAFE shall regularly or irregularly supervise and inspect the foreign exchange receipt and payment as well as the foreign exchange operation of banks and other institutions within the Area, and impose penalty for breach hereof according to the stipulations of Foreign Exchange Management Rules of People’s Republic of China and other foreign exchange management regulations; or warning, circulation criticism or fine of less than RMB 30,000 in case of no such stipulations or no definite penalty form and standards; or suspend or cancel the right of direct foreign exchange settlement or foreign exchange purchase at the banks for settlement or purchase of foreign exchange not in accordance with the Measures.

 

Article 18 Bonded logistics center (Category A and B), diamond exchanges, etc shall refer to and be applicable to these Measures.

 

Article 19 These Measures will go into effect on October 1, 2007, subject to the interpretation of SAFE. Unless stipulated expressly hereby, applicable foreign exchange management regulations within China but beyond the Area shall prevail. Any inconsistency between the former management regulations and these Measures shall be subject to these Measures.

 

Appendix 2:

 

The names of documents annulled after execution of the Management Measures for Foreign Exchange in the Free Trade Zone under the Customs Supervision:

 

The following documents are annulled after execution of the Management Measures for Foreign Exchange in the Free Trade Zone under the Customs’ Supervision

 

1.       The Notice of the State Administration of Foreign Exchange on Relevant Issues of Foreign Exchange Management in the Bonded Logistics Parks (HF [2005] No. 92)

 

2.       The Approval of the Comprehensive Department of the State Administration of Foreign Exchange on Foreign Exchange Purchase under Customs Declaration Import of Enterprises in Haikou Free Trade Zone (HZF [2005] No. 16)

 

3.       The Approval of the Comprehensive Department of the State Administration of Foreign Exchange on Foreign Exchange Transfer to Enterprises outside the Area in China (HZF [2004] No. 79)

 

4.       The Approval of the Comprehensive Department of the State Administration of Foreign Exchange on Foreign Exchange Purchase of Vehicle Distribution Enterprises in the Free Trade Zone (HZF [2003] No. 32)

 

5.       The Approval of the Comprehensive Department of the State Administration of Foreign Exchange on Remittance by Enterprises in the Bonded Area for Warehouse Goods in the Area of Overseas Enterprises (HZF [2003] No. 27)

 

6.       The Notice of State Administration of Foreign Exchange on Issuing the Management Measures of Foreign Exchange in Free Trade Zones (HZF [2002] No. 74)

 

7.       The Notice on Issuing the  Interim Measures of Foreign Exchange Management in Export Processing Area (HF [2000] No. 116)

 

Issuing Department: The State Administration of Foreign Exchange  Issuing Date: August 15, 2007  Implementation Date: October 1, 2007 (Regulations of the Central Government)

 

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