China to Boost Cross-Border E-Commerce

by Davis Wright Tremaine LLP

On Aug. 29, 2013, the Ministry of Commerce (the "MOFCOM"), in collaboration with eight other ministries and departments, released an "Opinion on Implementing Relevant Policies for Supporting Trans-boundary E-commerce Retail Exports" (???????????????????????) (the "opinion") to boost e-commerce retail exports and address regulatory gaps. With several concrete measures, the policies announced in the opinion will improve the convenience and efficiency of the e-commerce retail export. The measures have been effective since Oct. 1, 2013. It should also be noted that the opinion only applies to the B2C e-commerce. B2B e-commerce shall continue to observe the old regulations.

To enable the exporters to refund taxes
In China, an exporter must register with customs before it can refund taxes for exported goods. However, until May 2013 when the General Administration of Customs (the "GAC") adopted a pilot policy in five cities (Shanghai, Guangzhou, Hangzhou, Ningbo, and Zhengzhou), e-commerce retail exporters could not file such registrations. Although the opinion does not expand these pilot regions, it allows e-commerce retail exporters outside of the pilot cities to register in the pilot cities, so such exporters can also claim tax refunds.

The opinion also provides that tax bureaus will formulate appropriate implementing rules for such refunds.

To expedite the verification process for foreign exchange
Since e-commerce retail exporters could not previously register with customs, exporters settled foreign exchange via courier companies. With customs registration being open to e-commerce retail exporters, they can now open foreign exchange accounts in their own names.

In addition, the opinion strongly encourages banks and other financial institutions to provide payment services for e-commerce retail exporters. In response to such encouragement, the State Administration of Foreign Exchange granted the first batch of cross-border payment licenses to 17 third-party enterprises at the end of September.

To simplify the export procedure
To fit the business model more closely, the GAC and the General Administration of Quality Supervision, Inspection and Quarantine (the "GAQSIQ") adopted a more flexible method for supervising e-commerce. E-commerce retail exporters may use checklists to centralize their declaration and clearance at customs. After the GAQSIQ generally records or admits the commodities in accordance with their categories, third-party inspection agencies will be responsible for the inspection. Inspection will also be centralized.

To strengthen the supervision
In addition to the above promotion policies, the opinion provides that the competent authorities will strengthen supervision of the e-commerce exports to enhance its credibility and will take strict action to punish unfair-competition, such as fraud, counterfeiting, and infringement to intellectual property rights.

Recent actions by the Chinese government, including explicit direction from the State Council in July, shows the government is putting more emphasis on the e-commerce. As a representative of MOFCOM said in a press conference, the opinion foreshadows more detailed rules to be issued by the ministries and local governments.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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