China to Pilot New Preferential Tax Policies for Import and Export in the Shanghai FTZ

On July 2, 2024, the Ministry of Finance (MOF), along with other four Chinese authorities, issued the Circular on Tax Policies Related to Temporary Entry of Goods for Repair in the China (Shanghai) Pilot Free Trade Zone (the “Circular”), which took effect on June 27, 2024.

The Circular states that within the customs special supervision areas of the China (Shanghai) Pilot Free Trade Zone (including the Lingang Special Area), goods temporarily allowed to enter the pilot areas for repair by enterprises from overseas from the date of implementation of the Circular will be bonded, and those re-transported out of the country will be exempt from tariffs, import value-added tax, and consumption tax; If the goods are not transported out of the country and converted to domestic sales, import procedures shall be handled according to requirements, and import tariffs, import value-added tax, and consumption tax shall be levied in accordance with regulations based on the actual inspection status of the repaired goods. The Circular stresses that the policies are only applicable to Yangshan Special Comprehensive Bonded Zone, Shanghai Pudong Airport Comprehensive Bonded Zone, Shanghai Waigaoqiao Port Comprehensive Bonded Zone, Shanghai Waigaoqiao Bonded Zone, and other special customs supervision areas approved by the State Council in the Shanghai FTZ.