Exposition On VAT Laws And Regulations For Bonded Supervising Zones

The bonded supervising area is also called the customs specially supervising region. China have successively authorized many kinds of customs specially supervising regions in different time periods: 13 Bonded areas ;56 Exports processing regions ; 6 Bonded distribution areas; 2 Frontier cooperation centers & interstate industrial districts; 12 Bonded port regions; 6 comprehensive bonded areas with Bonded distribution functions .From the view of tax laws, all the above regions have the following characteristics: The basic word is"Bonded area", yet at present only the imported cargo bonded function is still retained, while tax reimbursement for domestic cargo within bonded areas has already been cancelled; Hence Chinese government establishes exports processing regions (presently with physical distribution function to processing enterprises within); The distribution enterprises give birth to the bonded distribution garden areas; Hallgos Port between China and Kazakhstan is a bonded physical distribution zone and Zhuhai-Macao industrial district is a processing & exporting region. A bonded distribution zone or a processing & exporting region in a harbor in space constitutes a bonded port area. China authorizes some districts to reunite bonded areas, processing & exporting regions and bonded distribution zones (bonded distribution centers) as synthesis bonded areas. This returns to the original concept of"bonded area", and mean to reform the supervison over special bonded zones, which aims at composing bonded distribution and bonded processing within bonded supervising regions.At present, there is a little comment on VAT laws and regulations over bonded supervising .The title should be studies on VAT laws & regulations within bonded supervising areas. As a primary supervising staff member,I try to see through those VAT-concerned problems within supervising zones and find out the links between those VAT laws on supervising zones and the ways to make the best use of them, moreover, give some ideas on how to improve the laws and regulations in my view. To improve regulations, the writer believes that MFt document No.(1995)92,clause 6 states that no tax induction can be made to cargo from non-bonded areas to bonded areas and thus has completely changed the concept and development for"bonded zones".Till this document was released, export tax rebate is offered to cargo from non-bonded areas to bonded areas as bonded areas are strictly regarded as out-of-customs areas. The clause"no tax induction can be made"means VAT collection is essential for goods entering bonded areas, thus VAT is required for goods to bonded areas from non-bonded areas. Yet, MFt document No. (1995)92,clause 6 doesn't terminate relative customs tax rebate regulations for supervising bonded areas and for operating bonded areas as out-of-customs areas because clause 6 states that tax rebate can be made after enterprises in bonded areas have exported(or processed and exported) overseas, which means MFt document No. (1995)92,clause 6 just put off tax rebate till goods exported overseas instead of being internally delivered into bonded areas. we can see that customs agrees with tax supervising authorities in bonded areas, such as VAT-free for re-exports and storage goods within bonded areas, that is, VAT-free for re-exports trade and transactions within bonded areas. The writer stresses that MF document No. (1995)92,clause 6 means a principal change made by government to turnover tax in bonded areas, and brings about a series of changes to regulations on bonded areas, and finally becomes a foundation to bonded areas VAT laws and regulations. The writer takes bonded port as an example to stipulate how to deploy VAT laws and regulations supervising bonded zones to their best. A detailed cargo-flow taxation analysis is made and complete description is offered on improving bonded supervising zones with deploying laws and regulations, with cases as international distribution/purchasing and processing trade illustrations.The writer propose that VAT laws and regulations can not stand away from bonded supervising zones. The emergency is ,the economic department of NPC(or its standing committee) or the State Council authorized by NPC, put out a special law for bonded supervising zones, in order to complete the law system foe bonded supervising zones. With a reference to international precedents and a far eyesight into the future, central government should issue a definite and proper legal status for bonded supervising areas and finally turn them to free-trade zones. Mutual but not definite supervision and management on bonded zones from Central and local administrations means frustrations and turmoil and a fair division, a good mechanism and a single boss is top urgent. Moreover, basic operations of bonded zones should be monitored effectively, and legislative procedures should be well watched to assure the assistance among laws and regulations. The writer suggests to make law on bonded supervising zones referring to American Foreign Trade Zones Act, passed by US Congress in 1934,thus established US foreign trade zones, mostly the same as our free-trade zones or bonded supervising zones. FTZA gives a legal foundation to customs bonded supervising zones and hence free of any possible disagreements or confusions while deploying relative laws and regulations. The ACT classifies foreign trade zones clearly as a special area that is beyond customs'jurisdiction, and under the direct leadership of US Foreign Trade Authority. First,FTZA is a good model in terms of law-making and enforcing and business supervising, from which we can see that in US, it is the central government that makes a unique FTZA to rule all about nationwide and avoid such disagreements among laws and regulations and law enforcing confusions caused by administration approvals and adjustments here in China. Second, American free-trade zones are under the leadership of AFTA, which submits annual reports to US Congress, and there are no interferences from central or other local authorities. FTZA has greatly improved US export and import while in China, our primary supervising mode leads to the contrary. At present China is unable to develop a law like FTZA only after our bonded supervising zones are well developed. However, US authorities have been making constant changes over FTZA while the word and its economy changed, and thus proved that an practical law is feasible. Regulations over bonded supervising zones would not be finished in one day and a basic law to supervise bonded zones will always be needed, no matter whether agreement is reached or not, since China has made bonded zones as bridgeheads for Chinese economy.Concrete:First chapter has outlined VAT laws and regulations for bonded supervising zones, mainly analyzing the concept of bonded supervising zones in China, elaborating the improvements on VAT laws and regulations for bonded supervising zones, and offering some personal ideas about the impacts among the VAT laws and regulations for bonded supervising zones.Second chapter has taken bonded ports as examples to explain how the VAT laws and regulations are deployed in Chinese bonded supervising zones in detail, and give further description in taxation cases of international distribution/purchasing and processing trade.Third chapter has described some problems with VAT laws and regulations for bonded supervising zones in China in detail. Firstly a conclusion has reached that there is few leading laws for VAT laws and regulations in bonded supervising zones in original and legal view. Secondly is lack of regulation coordination among customs, AFE and taxation department when specific regulations are deployed. Thirdly, constant changes for AFE export tax rebate , import & export qualification and taxation laws and regulations are notified, and confusions emerge while constant changing administration attitudes always stand in the way of existing laws and regulations. Fourthly tells how local interests push back laws and regulations for bonded supervising zones.Fourth chapter gives practical advice on improving VAT laws and regulations for bonded supervising zones in China. In a long term, it is essential to make a special law for Chinese bonded supervising zones according to international precedents. But in a short run, it is emergent to remove all regulation contradictions from administration departments to make a correct and smooth way for laws and regulations. Last but not least are some specific ideas on making and enforcing laws from the writer.