Definition of "Tariff Guarantee Insurance"
"Tariff Guarantee Insurance" is the first guarantee insurance product in China with a government agency (the customs) as the insured. Enterprises can realize guarantee release or release before tax payment by handling tax guarantee formalities or conducting consolidated taxation with the customs on the basis of the Tariff Guarantee Insurance Policy issued by the insurance company. On November 1, 2018, the reform pilot of using the Tariff Guarantee Insurance Policy as a tax guarantee was carried out within the customs territory of China, adding a new path option for enterprises to provide customs tax guarantee.
Applicable Cases and Enterprises of "Tariff Guarantee Insurance"
Under normal circumstances, import and export enterprises other than dishonest enterprises may handle customs duty guarantee business on the basis of a tariff guarantee insurance policy issued by an insurance institution.
Handling Process of "Tariff Guarantee Insurance"
1. Obtaining an insurance policy: The enterprise shall submit an application to the insurance company before handling customs clearance procedures for goods, sign a Tariff Guarantee Insurance Policy with the insurance company, pay the premium at the rate agreed in the insurance contract and obtain the insurance limit.
2. Customs filing: The insurance company transmits the electronic data of the policy to the directly affiliated customs department, and the directly affiliated customs department will approve and file it, and generate the collateral filing number of "General Guarantee for Customs Duties" in the customs system. A copy of tariff guarantee insurance shall be filed with the local customs office, and three types of tax guarantee services such as consolidated taxation, tax payment period and tax elements can be handled at all customs offices nationwide.
3. Customs clearance of goods: If the enterprise chooses to handle the guaranteed customs clearance of consolidated taxation or tax payment period, it shall select the guarantee filing number in the declaration interface of the customs declaration form; if the enterprise chooses to handle the guarantee of tax elements or the guarantee of specific customs business, it shall submit an application for guarantee filing in the "Guarantee Filing of Tax Elements" module of China International Trade Single Window, and then select the guarantee filing number after approval by the customs. After the system successfully deducts upon verification the security credit line or the customs verifies and endorses the guarantee affairs, secured release may apply to the customs declaration forms that meet the requirements for release.
Advantages of "Tariff Guarantee Insurance"
Before handling the "Tariff Guarantee Insurance", the tax guarantee provided by enterprises to customs was usually handled in the form of cash deposit or bank guarantee. When enterprises provide deposits or apply to banks for letters of guarantee, they often need to pay more self-owned funds and occupy the credit line. At the same time, banks have higher requirements on credit granting conditions for enterprises.
By contrast, the cost of a "Tariff Guarantee Insurance" guarantee is lower. Compared with the cash flow guarantee or fund mortgage required by banks, enterprises generally do not need to deposit a certain proportion of funds in insurance companies or mortgage corresponding assets when obtaining "tariff guarantee insurance", which has low capital occupation cost and guarantee cost, thus enabling enterprises to improve the speed of capital circulation.
Moreover, "tariff guarantee insurance" also has the advantages of low threshold and fast issuance. Except for dishonest enterprises, the enterprises of all sizes and types can handle it, which greatly reduces the credit difficulty of enterprises and can benefit more and more enterprises, especially small and medium-sized enterprises with great financing pressure, high requirements on customs clearance timeliness, insufficient bank credit line or not yet approved to be granted bank credit. The "Tariff Guarantee Insurance" business is easier to apply for and issue policies than banks, and some insurance companies have launched the "Single Window" online insurance application, which has higher timeliness.
In addition, when the "Tariff Guarantee Insurance" is used for guarantee release, the customs declaration procedures are simplified, which can effectively avoid cargo stagnation caused by problems such as fund scheduling in payment accounts and shorten customs clearance time of goods.
(Author Affiliation: Kunming Customs)
Disclaimer：The above content is translated from Chinese version of China Inspection and Quarantine Times. The China Inspection and Quarantine Times version shall prevail.