China - reforms to the foreign exchange management
11/16/2011
Allyn International manages freight for an international company with locations in Australia, Singapore, India, South Korea, Japan and China. Each of the satellite locations handles export declaration and regulation according to their own process. Of all of the locations, China is the most complicated.
The China branch, as shipper, must make a declaration to the Foreign Exchange Bureau (forex) with a full set of shipping documents for each shipment. All standard shipping documents must be presented including verification certificate on the export forex receipt. It is necessary to return this certificate after the cargo has been exported or the export will not be closed. This means the export forex collection and tax rebate will not be realized.
Recently, China’s foreign exchange regulator advised of upcoming reforms to the foreign exchange management system for the trade of goods. The reform intends to reduce social costs, promote foreign exchange management and facilitate goods trade per the State Administration of Foreign Exchange’s web site. The proposed new system will be available on a limited basis for trial in the provinces of Jiangsu, Shandong, Hubei, Zhejiang and Fujian as well as Da’lian and Qingdao cities.
The system should simplify the forex payment and settlement process for the trade of goods as well as the export tax rebate process. In addition, it will improve the information flow between export forex collection and tax rebate. Most important, the original verification certificate on the export forex receipt will be replaced by an electronic document. It will improve the cycle time for export forex collection and the tax rebate process and eliminate the possibility of losing or failing to provide the original paper certificate.
Our international client will certainly benefit from the program with reduction of delays, accuracy of documentation and realizing the tax rebate faster!