SpoNSoRED Feature
Customs
Audits & Investigations
Introduction tations audits/investigations. Customs handled ap-
The Customs Authority of China has implement- proximately 12,210 audits/investigations cases and
ed post-importation audits and investigations as an generated additional revenue from the following
(Figure 3)
efficient method for ensuring that companies com- sources:
ply with the law whilst simultaneously enabling daily
incoming/outgoing shipments to be released quickly. Case Study # 1 – Valuation
This article summarizes the Customs department’s Industry: Automobile (Figure 3)
recent efforts on implementation of post-importa- Overseas
tion audit and investigation and also shares practi- Alleged Violation: Headquarters
cal case studies from selected enterprises that have The gross margin derived by the importer/distrib-
favourably resolved cases with minimal financial li- utor was higher than the gross profit level of other
ability, adverse interruption to daily operations, and importers/distributors of completely built up auto-
limited reputation damage. mobiles.
The related party transaction between the China
Overseas
Key Statistics importer/distributor and overseas headquarters had
China’s Foreign Trade Import and Export (2009) (Figure 1) influenced the transaction price, which was not arm’s
Tax Collection (2009) length in nature. China
Total tax collection for 2009 was RMB921.4 bil- An uplift (increase) of import price and duty claw-
lion, which represented an increase of 0.6% com- back was requested by Customs.
pared to 2008, but was just below the 2009 target of Amount of Potential Exposure:
RMB980 billion. Given the decrease in import and The potential exposure for 2006-2008 was approx-
Importer/
export value in 2009 compared with 2008 this was a imately RMB 280 million based on the average gross
Distributor
remarkable achievement. margin level in the industry.
Sources of Additional Revenue (2009) (Figure 2) Strategy to Resolve:
Customs was able to preserve its revenue base The Deductive Method was adopted in order to
through conducting more successful post-impor- demonstrate an arm’s length import price. Several
China’s Foreign Trade Import & Export (2009) Sources of Additional Revenue
(Figure 1) (Figure 2)
Value (USD) Subject Revenue (RMB)
Dealer
Total Imports
13.9% 2,207.3 billion and Exports
Valuation
10.515 billion 44.5%
Tariff
Classification 1.3 billion
1,045%
11.2% 1,005.6 billion
Imports only
Customer
16.0% 1,201.7 billion Exports only
Processing Trade 30.23 billion 12.6%
(domestic sales)
Invoice Flow
Goods Flow
34.2% 196.1 billion Trade Surplus
56 MARCH/APRIL 2010 www.supplychains.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68