To facilitate the transformation and upgrading of processing trade operations within comprehensive bonded zones, China Customs has been actively facilitating domestic sales procedures for bonded processing goods. This initiative supports processing trade enterprises in transitioning from the traditional "dual external dependence" model to leveraging both domestic and international resources and markets, thereby contributing to the establishment of a new development paradigm that prioritizes domestic circulation while fostering mutually reinforcing dual circulation in comprehensive bonded zones.
I. Definition of Domestic Sales of Processing Trade Goods
“Domestic sales of processing trade goods” refers to the scenario where enterprises engaged in processing trade are unable to fulfill their original export commitments even though the goods are being processed, necessitating the conversion of bonded materials (including raw materials, semi-finished goods, finished goods, or leftover bits and pieces) for distribution in the domestic market or utilization in domestic-oriented production.
Since regulatory stipulation and specific requirements vary depending on the category of processing trade goods involved in domestic sales, this document provides an authoritative interpretation of applicable policies concerning domestic sales of goods for processing trade enterprises operating within comprehensive bonded zones.
II. Eligible Categories of Processing Trade Goods for Domestic Sales in Comprehensive Bonded Zones
(1) Finished goods
(2) Defective products (including both completed and incomplete items)
(3) Surplus materials and parts
(4) Leftover bits and pieces
(5) By-products
(6) Disaster-hit bonded goods
III. Tax Payment Requirements for Domestic Sales of Processing Trade Goods in Comprehensive Bonded Zones
Yes, tax payment is required. Unless otherwise stipulated by laws and regulations, enterprises within the zone or consignors/consignees outside the zone shall pay customs duties and relative import taxes according to the actual condition of the goods for domestic sales when leaving the comprehensive bonded zone. Enterprises within the zone or consignors/consignees outside the zone may alternatively apply for the Policy of Selective Levy of Tariffs, under which customs duties may be calculated based on the corresponding imported materials used in production when leaving the comprehensive bonded zone, with applicable deferred duty interest payments. Furthermore, import-related taxes shall be paid according to relative regulation and the actual condition of goods upon zone exit.
Unless otherwise stipulated by laws and regulations, when leftover bits and pieces, defective products, or by-products generated during processing using bonded materials are sold outside the zone, taxes shall be paid by corresponding enterprises within the zone based on the actual condition of goods at zone exit. For defective products and by-products subject to tariff-rate quotas or license management, the relevant quotas or licenses must be obtained by enterprises within the zone or consignors/consignees outside the zone.
For leftover bits and pieces, by-products, and disaster-hit bonded goods requiring taxation based on residual value that are approved by Customs for domestic sales through auction, Customs shall determine the dutiable value based on the auction price.
IV. Procedures for Domestic Sales of Processing Trade Goods in Comprehensive Bonded Zones
Through the China International Trade Single Window, enterprises within the zone shall declare bonded verification lists, whereas enterprises outside the zone shall declare general trade import customs declarations and pay applicable taxes and deferred duty interest according to tax assessment notices.
For enterprises participating in the pilot program of general taxpayers of VAT, the relevant pilot policy provisions shall apply. Specifically, when pilot enterprises sell goods containing bonded materials, they shall declare and pay import taxes to Customs based on the condition of the bonded materials when they first entered the comprehensive bonded zone, and pay the corresponding deferred duty interest as required by regulations.
V. Policy Benefits for Centralized Declaration of Processing Trade Goods in Comprehensive Bonded Zones
Unless otherwise specified by the General Administration of Customs, enterprises within the zone shall complete quarterly centralized declaration procedures no later than the 15th day of the month following the end of each quarter, provided that such declaration does not exceed the account verification deadline. Centralized declarations must be completed within the same calendar year, with the following quarterly deadlines: April 15, July 15, October 15, and December 31.
Advanced Certified Enterprises (AEO) operating within comprehensive bonded zones may apply to their respective supervising customs authoritieswithin the zones for exemption from guarantee requirements when conducting split-delivery consolidated declaration operations.
VI. Domestic Sales Management Requirements for Four Categories of Measure-controlled Goods and Their Finished Goods resulting from Bonded Processing in Comprehensive Bonded Zones
The four categories of measure-controlledgoods refer to commodities subject to tariff-rate quota administration, trade remedy measures, suspension of tariff concession obligations, imposition of additional duties, as well as the imposition of additional tariffs as retaliatory tariffs.
Finished goods manufactured from bonded processing of these four kinds of measure-controlled goods may be sold domestically only if they have not undergone bonded circulation. For such domestic sales, customs duties shall be assessed on all bonded imported materials used in production; import VAT and consumption tax shall be levied according to prevailing regulations, with control measures for the four categories being enforced. Goods that have undergone bonded circulation are prohibited from domestic sales.
Leftover bits and pieces, defective products, and by-products generated from the processing of above-mentioned four categories of measure-controlled goods are ineligible for domestic sales on one hand, and must be either re-exported or destroyed in accordance with existing regulations on the other hand. However, leftover bits and pieces, defective products, and by-products generated from the processing of non-measure-controlled goods may be approved for domestic sales. For defective products being sold domestically, the verification list header must be clearly marked with "Domestic Sales of defective products" in the remarks field.
Disclaimer：The above content is translated from Chinese version of Official Platform for China Customs. The Official Platform for China Customs version shall prevail.
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