Operating units and production enterprises executing compensation trade contracts shall apply to the customs for record-filing and registration within one month from the date of contract approval, and submit the following documents at the same time:
(1) The approval certificate and contract record-filing certificate issued by the competent economic and trade department.
(2) The business license issued by the administrative department for industry and commerce.
(3) The copy of the contract signed with the foreign party.
(4) The export finished product approval document for export goods requiring an export license, approved by the competent foreign economic and trade department.
(5) Other documents and economic guarantees deemed necessary by the customs. After reviewing the above documents, the customs will record those meeting the conditions for compensation trade and issue the "Registration Manual for Imported Goods for Processing and Assembly and Small and Medium-Sized Compensation Trade," based on which the customs declaration procedures for the goods are handled.
Compensation Trade Record-Filing Process
Within 30 days after the compensation trade contract is signed, registration and record-filing shall be carried out with the customs. After customs review and approval, a registration manual is issued. After the contract is executed, the cancellation procedures shall be handled with the customs.
Compensation Trade Customs Record-Filing Process
Compensation trade is a trade method where the foreign party provides equipment and technology, and the Chinese party repays with products. The procedures for handling compensation trade registration and record-filing with customs are as follows:
- Project Approval — Submit the compensation trade project application to the competent commerce department to obtain the project approval document.
- Contract Record-Filing — Apply to customs for contract record-filing with the compensation trade contract, project approval document, and other materials.
- Equipment Import — After customs review and approval, the equipment provided by the foreign party can be imported duty-free with the "Exemption Certificate."
- Product Export — When exporting products produced using the imported equipment, declare the export to customs and cancel the compensation trade manual.
The compensation trade manual must be cancelled within the specified period. Enterprises should establish special account records for compensation trade business to ensure a clear correspondence between imported equipment and exported products, facilitating subsequent customs verification.
Bofeng Logistics specializes in providing one-stop logistics services including domestic container shipping, international shipping (FCL/LCL), Hong Kong and Macau logistics dedicated lines, as well as trucking, customs declaration, and warehousing. Contact number: 130-7567-8958 (Manager Huang), call now for a customized quote!
Compensation trade is an important trade method, and standardized record-filing is a prerequisite for the smooth execution of contracts.
Compensation Trade Precautions
The compensation trade contract should specify the specifications, quantity, and delivery time of the compensated products. The compensation period generally should not exceed five years. Enterprises should assign dedicated personnel to manage the compensation trade manual and promptly handle cancellation procedures to avoid affecting subsequent business.
Advantages of Compensation Trade
Compensation trade is an important way to introduce foreign technology and equipment. Enterprises repaying equipment costs with products can reduce foreign exchange pressure. However, contract terms must clearly define product quality standards and delivery times to ensure the rights of both parties. Bofeng Logistics can provide consulting services for compensation trade customs declaration.
Bofeng Logistics can assist in handling compensation trade customs declaration procedures. Contact number: 130-7567-8958.
Differences Between Compensation Trade and General Trade
Compensation trade, which repays equipment costs with products, differs from the monetary settlement of general trade. Compensation trade involves two related transactions: equipment import and product export. Contract record-filing and cancellation procedures are relatively complex.
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