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Hangzhou Cross-Border E-Commerce Pilot Zone Adopts "Negative List" Approach

The Hangzhou Entry-Exit Inspection and Quarantine Bureau recently announced the implementation of the "negative list" approach in managing the scope of imported goods entering the China (Hangzhou) Cross-Border E-Commerce Pilot Zone. Except for goods that are on the “negative list”, such as human tissues, microorganism, used or waste products, radioactive products and dangerous chemicals, all other goods may be imported under the general principle that "market entities can do anything which is not prohibited by the law".

The China (Hangzhou) Cross-Border E-Commerce Pilot Zone is China's first comprehensive pilot zone for cross-border e-commerce. The above regulation is just one of the many innovative measures being introduced by this pilot zone. According to the General Office of the Leading Group for the Building of the Pilot Zone, 32 innovative measures have already been put into trial application and the overwhelming majority of these are introduced for the first time in the country.

The Hangzhou Customs took the lead to do away with customs transfer within the special customs supervision area and introduced measures such as "declaration of cargo manifest" for cross-border retail export and "entry before customs declaration" for the declared goods. It made the commitment to "work throughout the year and complete all customs procedures within 24 hours after the arrival of the goods in places under customs supervision".

While approving the participation of more payment institutions in the pilot programme for cross-border foreign exchange payments, the foreign exchange administration department will also raise the single transaction limit for trade in goods and trade in services from US$10,000 to US$50,000. Through the simplification of documents, measures such as allowing individually-owned businesses to open settlement accounts will be taken to facilitate individual foreign trade operators in their foreign exchange settlement in a bid to steer clear of grey foreign exchange receipt and payment channels of the past.

In the past, export goods purchased that were unable to obtain legal and valid proof were deemed as domestic sales and taxed accordingly. The pilot zone has introduced the innovative policy of "tax exemption without documentary proof" under given conditions. Under this policy, cross-border e-commerce retail exports subject to the "single window" of the pilot zone will be eligible for the temporary exemption of value-added tax before the end of 2016 even without legal and valid proof so long as the export enterprise registers the name of the relevant selling party, its taxpayer registration number, the name, quantity, unit price and total value of the goods, and other purchase information. Director of Hangzhou State Taxation Bureau Shen Hua said this policy would greatly facilitate e-business operators in their cross-border e-commerce retail exports and give them more room for profits.

Content provided by Picture: HKTDC Research
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