How Can Enterprises Handle Voluntary Disclosure for Customs Declaration Errors? (Customs Q&A)

 

 

Ningbo Customs,

I am the head of customs affairs at a local foreign trade enterprise in Ningbo. I've heard that if an enterprise voluntarily discloses customs declaration errors or other violations and promptly corrects them, the customs have policies for reducing or waiving penalties. Hence, I would like to inquire: What specific violations do these policies pertain to? How can enterprises voluntarily disclose customs declaration errors?

Mr. Wu, head of customs affairs of a foreign trade enterprise in Ningbo

Dear Mr. Wu,

According to the Customs Law of the People's Republic of China and other relevant legal provisions, Customs is required to penalize violations of customs supervision regulations as prescribed. Any illegal gains are subject to confiscation.

To further enhance the business environment and foster high-quality development of foreign trade, the General Administration of Customs (GACC) issued the "Announcement on Matters Related to Voluntary Disclosure of Non-compliance" (Announcement [2023] No.127, referred to as Announcement No.127) in October 2023. Import and export enterprises and entities are encouraged to proactively report in writing to Customs and comply with Customs' actions if they identify instances of underpayment or non-payment of taxes, or other breaches of customs regulations through self-audit. The Customs shall impose a lighter, mitigated or no administrative penalty according to law.

The details are explained as follows:

• Types of violations involved in voluntary disclosure

Announcement No. 127, building on the "Announcement of the General Administration of Customs on Handling Matters Related to Active Disclosure of Tax-related Violations" (Announcement [2022] No. 54), further eases the conditions for exemption from administrative punishment, specifies detailed disposal requirements, and elaborates on the relevant scenarios where import and export enterprises and entities may be exempted from administrative penalty by actively disclosing violations of customs regulations.

The "scope of application" for voluntary disclosure encompasses seven types of activities, such as tax-related, inspection-related, affecting export tax rebate, affecting customs statistics, affecting supervision order, processing trade and some minor procedural violations, basically covering the common types of violations of enterprises.

• How to make active disclosure declarations

According to Announcement No. 127 of the General Administration of Customs, where the import & export enterprises or entities take the initiative to disclose to the customs, they shall fill in the Active Disclosure Report Form, attach account books, documents and other materials, and report to the customs at the place of customs declaration, actual place of import & export or place of registration.

To "minimize the hassle for enterprises," when submitting an application for active disclosure, enterprises can choose to submit either in person at the customs office of the declaration location, the actual import-export location, or the registration location, or alternatively, they can submit active disclosure documents via online platforms.

Import and export enterprises or entities can access the "Enterprise Management and Inspection" module in the "Internet + Customs" link through the portal website of the General Administration of Customs, enter the "Enterprise Inspection (Active Disclosure)" column and go through the formalities according to the system requirements. Alternatively, they can visit the "China International Trade Single Window" website, select the "Enterprise Inspection (Voluntary Disclosure)" function under the "Enterprise Management" section, sign for documents, submit voluntary disclosure applications, and related materials through this module, and receive feedback from customs on the processing status.

• Variation in policy application for voluntary disclosure by advanced certified enterprises

Advanced Customs Certified Enterprises (AEO enterprises) refer to entities engaged in the international circulation of goods, complying with the Measures of the Customs of the People's Republic of China for the Administration of the Credit of Enterprises Registered and Filed and the Criteria for Advanced Certified Enterprises under the AEO Program, and have received customs certification. Advanced certified enterprises are entitled to receive more preferential treatments in international trade.

In July this year, the General Administration of Customs released the "Announcement on Matters Related to the Handling of Voluntary Disclosure of Violations by Advanced Certified Enterprises" (Announcement [2024] No. 87), which outlined the voluntary disclosure policy applicable to advanced certified enterprises. According to the Announcement, if an advanced certified enterprise voluntarily discloses any violation of customs regulations and meets any of the following conditions, no administrative penalty shall be imposed:

I. Voluntarily disclose to the customs within one year from the date of occurrence of tax-related violations.

II. Voluntarily disclose to the customs more than one year but less than two years from the date of the occurrence of tax-related violations, where the proportion of tax omission or underpayment is less than 30% of the tax payable, or the tax omission or underpayment is less than RMB 1 million.

III. Affecting the national administration of export tax refunds.

(I) Voluntarily disclose to the customs within one year from the date of occurrence of violations;

(II) Voluntarily disclose to the customs for more than one year but less than two years from the date of occurrence of the violation, which affects the national administration of export tax refund and may result in an additional tax refund accounting for less than 30% of the tax refund payable, or a possible additional tax refund of less than RMB 1 million.

• Customs reminder

The actions taken by import and export enterprises or entities, which are voluntarily disclosed and penalized by Customs with either a warning or a fine not exceeding RMB 1 million, shall not be included in the records of the customs for determining the credit status of enterprises. If an advanced certified enterprise takes the initiative to disclose any violation of customs regulations, the customs shall not suspend the application of corresponding management measures to the enterprise during the investigation period. However, inspection items related to safety, environmental protection, and hygiene are excluded.

Where the import & export enterprises and entities take the initiative to report their tax-related violations to the customs in writing and accept the handling of the customs, and the customs deems their behaviors as the active disclosure which will not be subject to administrative punishment, the import & export enterprises and entities may apply to the customs for a tax and overdue fine reduction or exemption according to law. Those satisfy the requirements shall be exempted by the customs.

Where an import and export enterprise or entity voluntarily discloses to the Customs for the second time or more within one year (consecutive 12 months) the same act in violation of customs regulations (referring to acts of the same nature and violating the provisions of the same clause of the same legal provision), the relevant provisions of Announcement No.127 shall not apply.

Voluntary disclosure of violations of customs regulations before being discovered by customs applies only to underpayment or non-payment of taxes or other breaches of customs rules. It does not include smuggling, evasion of customs supervision, or other illegal and criminal activities. Matters involving other violations or crimes, such as fraudulent export tax refunds, illegal foreign exchange arbitrage, issuing false VAT invoices, or evasion of foreign exchange controls, do not fall under the scope of voluntary disclosure.

 

 

---

Disclaimer：The above content is translated from Chinese version of this website. The Chinese version shall prevail.