What Is the Export Processing Zone?

The export processing zone is a special industrial zone designated or opened by the state to manufacture, process and assemble export commodities. One of the forms of special economic zones is often to enjoy various local tax concessions. Export processing zones are generally selected in areas with relatively developed economies, convenient transportation and foreign trade, sufficient labor resources, and good urban development foundations, and are mostly located near coastal ports or national borders. The world's first export processing zone was Shannon International Airport, built in Ireland in 1956. Kaohsiung, Taiwan, China established an export processing zone in the 1960s. In the future, some countries will follow suit. After China implemented the reform and opening up policy in the 1980s, some coastal cities began to build export processing zones.

Narrowly defined export processing zone refers to the development of a country or region in order to use foreign capital.

Attracting a large amount of foreign capital, creating conditions for promoting the introduction of technology and improving the output and quality of products, and accelerating the upgrading of products;

Expanding exports and increasing foreign exchange earnings. Typical assembly industry that usually uses imported raw materials and components, foreign exchange income can account for 30-40% of the export value;

Increased employment opportunities and alleviated a large number of unemployment problems in the host countries and regions;

Improved the level of production technology and management, and promoted the growth of various talents;

Promote and promote economic development in other regions of the country through inline and the diffusion of technology and talents.

Unless otherwise stipulated by the state, the import and export of goods between export processing zones and foreign countries shall not be subject to import / export quotas or license management.

Commodities that are prohibited by the state from being imported or exported shall not be allowed to enter or exit export processing zones.

Processing trade business prohibited outside the export processing zone shall also not be carried out in the export processing zone, except as otherwise provided by laws and regulations.

It is stipulated that no dismantling or renovation business can be carried out in the export processing zone.

As a special type of development zone, export processing zones possess all the characteristics of development zones. "How to understand development zones" gives a basic understanding of development zones.

The special feature of the export processing zone is that it is a special customs supervision area, a special area within the People's Republic of China and outside the customs of the People's Republic of China. Commonly known as "domestic customs".

To understand the particularity of export processing zones, the key lies in understanding the "domestic customs clearance".

The so-called "domestic" means that the export processing zone where the company is located is within the territory of the People's Republic of China, so all Chinese laws and regulations apply. The company's registration, operation and taxation are subject to the relevant provisions of Chinese laws and regulations.

The so-called "foreign customs" means that the export processing zone where the company is located is outside the customs supervision of the People's Republic of China. "External customs" constitutes the main feature of export processing zones. All items in the EPZ are deemed to be abroad.

1. All items that enter the export processing zone from China are exported. Suppliers can get export tax rebates.

Including: raw materials, equipment, plant construction materials, hydropower and coal consumption, etc.

2. All items entering the export processing zone from abroad are general trade, without customs duties and value added tax.

Raw materials and equipment entering the export processing zone abroad are exempt from customs duties and value-added tax.

3. All items that enter China from the export processing zone are imported.

Tariffs and import value-added tax are levied on items that enter China's territory from export processing zones.

4. All items that enter the country from the export processing zone are general trade.

There is no VAT and no export tax rebates for enterprises in the EPZ.

The enterprises that are most suitable for setting up enterprises in export processing zones are those whose raw materials come from abroad and whose products are exported. This is equivalent to production or abroad, but enjoys China's cheap labor. Of course, the corresponding increase in transportation costs. This type of enterprise is the original intention of the establishment of export processing zones, and is also the target customer of export processing zones.

For those companies that import some raw materials and export some products, they need to conduct economic analysis to see which of the export processing zones and general development zones cost less.

Shenzhen Export Processing Zone

Preface to the Export Processing Zone

In order to strengthen and improve the management of processing trade, in accordance with the spirit of the State Council's Reply to the "Interim Measures of the Customs of the People's Republic of China on the Supervision and Control of Export Processing Zones" (Guo Han [2000] No. 38), with the consent of the General Administration of Commerce and Customs, Method.

Text of Export Processing Zone

1. Export processing zones are special closed areas approved by the State Council and supervised by the customs.

2. For goods shipped outside the processing zone by the export processing zone, the customs shall handle import declaration procedures in accordance with the relevant provisions on imported goods, and levy value-added tax and consumption tax on the goods declared; the enterprises outside the export processing zone (hereinafter referred to as "outside zone enterprises") The same applies to the goods imported into the export processing zone. The goods shall be deemed to be exported. The customs shall handle the export declaration formalities and issue the export goods declaration form (exclusive for export tax refund).

The "outside zone enterprises" mentioned in these measures refer to enterprises with import and export operation rights, including foreign trade (industrial and trade) companies, foreign-invested enterprises, and domestic production enterprises with import and export operation rights.

3. Domestic enterprises, equipment, raw materials, parts, components, and packaging materials sold by enterprises outside the zone to enterprises in the export processing zone (hereinafter referred to as "zone enterprises", hereinafter the same) and transported into the export processing zone for use by the enterprises in the zone. As well as infrastructure materials (excluding water, electricity, gas) for the construction of infrastructure, processing enterprises and administrative departments' production and office buildings, enterprises outside the zone can rely on customs declaration forms for export goods (exclusive for export tax rebates) and other existing regulations The export tax refund certificate shall be reported to the tax authority for tax refund (exemption).

Sales of out-of-area enterprises to the enterprises and administrative departments in the zone and transportation into the export processing zone for their consumption and transportation tools; sales of out-of-zone enterprises to enterprises and administrative departments in the zone and transportation into the export processing zone Imported machinery, equipment, raw materials, parts, components, packaging materials and infrastructure materials for their use will not be issued by the customs (export tax refund only), and the tax department will not handle tax refund (exemption).

4. For goods exported by foreign-invested enterprises subject to the tax exemption management measures, goods that have been refunded (exempted) as mentioned in Article 3 of these Measures and sold into the export processing zone will still be subject to tax exemption policies by the end of 2000.

5. For goods sold outside the zone and shipped into the export processing zone, export sales invoices shall be issued, and no special value-added tax invoices or ordinary invoices shall be issued.

6. For goods subject to tax refund (exemption) sold by enterprises outside the zone to enterprises in the zone and transported into the export processing zone for use by the enterprises in the zone, the enterprises outside the zone shall complete the export goods declaration form and export goods declaration form in accordance with customs regulations. The "transportation method" column should be "export" (the transport method is called "export processing zone").

7. The goods processed and produced by the enterprises in the zone are exempt from value-added tax and consumption tax if they are directly exported and sold to the enterprises in the zone. Tax refunds will not be granted for goods exported by enterprises in the zone.

8. The enterprises in the zone entrust the enterprises outside the zone to process the products, and no tax refund (exemption) will be granted.

9. Enterprises in the zone shall pay local taxes in accordance with the current relevant laws, regulations and rules.

10. Domestic-funded enterprises in the zone pay income tax in accordance with the current national corporate income tax laws and regulations, and foreign-invested enterprises shall implement the income tax policies and regulations in accordance with the relevant economic and technological development zones.

11. For export processing zones that have been approved and approved in the "Four to Scope", processing enterprises and administrative departments within the zone must purchase applications from outside the zone for application to the local taxation department and customs. The infrastructure materials purchased within the audit quota can be applied to the local taxation authority for tax refund (exemption) procedures with the customs declaration form for export goods (for export tax refund only) after the formal acceptance and supervision of the export processing zone by the customs.

12. Any person who violates the relevant provisions of these Measures and uses fraud or other means to defraud the tax refund (exemption) shall be punished in accordance with the relevant provisions of the Law of the People's Republic of China on Tax Collection and Management.

13. The State Administration of Taxation is responsible for the interpretation of these measures.