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Home Business Law

New pass-border e-commerce rules

Kate Walton by Kate Walton
August 19, 2022
in Business Law
0

Several Chinese government, inclusive of the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Finance, the General Administration of Customs (GAC), the State Administration of Taxation, and the State Administration for Market Supervision, together issued a Circular on Improving Supervision of Cross-Border E-Commerce Retail Imports, which took effect on 1 January 2019. The GAC eventually issued a Circular [2018] No. 194 to effect the aforementioned regulation, additionally powerful on 1 January 2019 (both circulars are together called the New CBE Regulations).

The New CBE Regulations replicate the longstanding coverage objective of the Chinese authorities to divert pass-border e-trade sales from the much less regulated, shady channels, which includes the normally-acknowledged “daigou” to the intently supervised CBE channel. The policy equipment for accomplishing this objective consists of the multiplied incentives for the applicable parties to transact via the CBE channel. Meanwhile, to clamp down at the viable abuse of those incentives, the New CBE Regulations display the clean commitment to strengthening enforcement in opposition to illicit operations, specifically those aimed toward exploiting the tax reduction advantage of the CBE program. Also, to offer greater protection to Chinese customers in phrases of product satisfaction and safety, the New CBE Regulations explicitly hold the distant places dealers and their particular Chinese “responsible parties” collectively and severally in charge.

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Having regard to those adjustments, all individuals in the CBE delivery chain, which includes the foreign places dealers, will now need to take prudent and compliant measures, along with due diligence on particular Chinese events, to avoid being a situation to enforcement against illicit commercial enterprise sports and put off capacity legal liabilities beneath the New CBE Regulations.

MORE BENEFITS AVAILABLE

Apart from the blessings that have already been made available and will keep using, the New CBE Regulations create certain new blessings to bolster the incentives to purchase thru the CBE channel. These advantages consist of:

Pre-importation registration waiver. The New CBE Regulations indefinitely make the waiver of the pre-importation registration requirements on distinctive classes of products (e.G., cosmetics, little one milk formulation, healthy meals, clinical devices, etc.) which turned into initially set to expire on 31 December 2018. As pre-importation registration is an essential part of the modern-day regime to impose Chinese countrywide standards on certain “touchy” foreign products, this waiver keeps permitting products, which might not be to be had inside the everyday commercial channels because of market access barriers, to be imported through the
CBE channel.

Value limit relaxation. The price restriction for each shipment of goods under the CBE program is now expanded from RMB2,000 to RMB5,000, and the once-a-year quota is likewise elevated from RMB 20,000 to RMB26,000. Moreover, in which the value of a product exceeds the in step with-shipment limit but falls in the purchaser’s annual quota restriction, the product can still be imported underneath the CBE program and entitled to the registration waiver as discussed above, provided that it’s miles an inseparable piece of product. Nevertheless, the Chinese customer isn’t entitled to the tariff exemption or import tax reduction for this specific shipment. This relaxation permits high-priced merchandise to be imported via the CBE channel.
Tariff exemption and tax discount. The current tax coverage under which customs obligations are exempted, and import VAT and consumption taxes are gathered at a 30% bargain for the goods imported thru the CBE channel continue to be implemented.

Expanded “high-quality lists.” The scope of the “tremendous lists,” which includes the tariff classes for the products accredited to be bought beneath CBE, is elevated to consist of sixty-three new tariff categories.
FTZ distribution center. The New CBE Regulations continue to permit an overseas seller to stockpile its merchandise in one of the unique free change zones (FTZ) in China. It could fulfill its consumer orders and supply the goods without delay to the top clients. This gives foreign place dealers an extra efficient transport choice compared to the opportunity choice of international parcel shipping. In the evaluation, dealers now not enrolled in the CBE software aren’t accredited to sell their products directly from an FTZ to Chinese clients.

NEW RESPONSIBILITIES

The new compliance obligations imposed by way of the New CBE Regulations encompass the following:
After-sales offerings and client protection responsibility. The New CBE Regulations formalize the requirement, which has always been adopted on the nearby port degree at some point of the beyond 3 years, that a remote places seller beneath the CBE program ought to designate a Chinese “accountable party” so that it will be held at once responsible via the Chinese government for consumer lawsuits, product don’t forget and different product exceptional or protection obligations.

Under the New CBE Regulations, the remote places dealer and its Chinese “responsible birthday party” may also be held severally and together responsible wherein a civil motion lawsuit is filed against either of them. They also are required to have in location a product statistics traceability machine that could, at the minimum, retrace each product to its overseas port of departure, or the quantity feasible, the foreign consignor and producer.
Customs compliance. With admire to customs compliance, the New CBE Regulations pressure the prohibition against redistribution of the products imported through the CBE channel. It has been the Chinese government’ foremost difficulty over redistribution that the neighborhood vendors (including e-trade entrepreneurs called “daigou” traders) may also take benefit of the tariff exemption and import tax discount advantages of the CBE application to stay away from the price lists and import taxes they have to pay otherwise if the goods are imported thru the regular industrial channel.

To address this issue, the New CBE Regulations area responsibilities on all of the members in the CBE supply chain, inclusive of the overseas supplier and the platform operator, and the logistics provider carriers. For example:

The foreign places supplier and its distinct Chinese “accountable party” are accountable for posting a caution on its save internet site, highlighting this prohibition to the capability customers.

The platform operators (e.G., Tmall, JD) are required to conduct due diligence in verifying the identity information of every man or woman client and installed place a managed device to come across and deter doubtful buy activities. The “dubious sports,” as enumerated by way of the rules, consist of (a) large volumes of purchases ordered with the aid of an equal person, brought to an identical cope with, the usage of a same cellular telephone number because the consumer’s contact facts, or with payments remitted from an identical bank account; and (b) purchases the use of a person else’s identity facts.

Postal and courier service vendors are required to perceive shipping orders directly. The recipient’s cope with isn’t the same as the address declared on the customs clearance files and took immediate moves to suspend the transport and document the incident to customs.

On top of the above requirements, all the businesses worried within the CBE operations (inclusive of the overseas dealers) have a widespread obligation to document violations to customs and cooperate with customs in investigating violations concerning a redistribution. Customs is authorized to behavior audits towards any of those businesses.

Kate Walton

Kate Walton

I am a lawyer. I love to write blogs on my free time. I like to write about all things related to the law. I have always been a writer and have been writing ever since I was in grade school. I believe that learning should be fun, engaging, and interactive. My articles are written for a general audience and contain basic legal information for those who need a quick reference or refresher.

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