General

According to the official account of the "customs release", on May 15, the head of the Port Supervision Department of the General Administration of Customs answered a reporter's question about the international trade transit business carried out in Northeast China through the ports of neighboring countries. In order to reduce the logistics costs of bulk goods in Northeast China, since 2007, China has agreed to transport the goods in this region to the ports of neighboring countries for transit and then to the ports of southern China for entry according to the international transit business. International transit is an internationally recognized customs business, and China has accumulated years of practical experience.

In 2007, the General Administration of Customs issued a notice allowing goods from Heilongjiang Province in China to carry out international transit business through multiple overseas ports, including Vladivostok Port in Russia, and the related business has been running well.

In May 2023, the General Administration of Customs announced the agreement to add Vladivostok Port in Jilin Province as an overseas transit port, which is a mutually beneficial and win-win cooperation model among relevant countries. The General Administration of Customs will actively support the development of this business based on tracking and evaluation.

According to reports, Jilin has abundant resources and superior geographical location, but due to the lack of sea ports, long-term transit of sea freight from Dalian Port in Liaoning has restricted the transportation of goods in the Northeast region, which has hindered the economic development of the region. Vladivostok Port (Vladivostok Port) is located in the northeast of the Eurasian continent, with a superior geographical location and unique transportation conditions.

The land transportation from Jilin and Heilongjiang to Liaoning ports generally exceeds 1000 kilometers, while the transportation from Suifenhe and Hunchun to Vladivostok port (Vladivostok port) in Russia is only about 200 kilometers.

Since 2022, the trade volume between China and Russia has significantly increased, leading to an increase in the capacity of container ships from China's southeastern coastal ports to Vladivostok Port (Vladivostok Port) and an increase in the ability of ships to carry cargo back. At this time, in September 2022, the Aviation Administration of Hunchun City, Jilin Province applied to add Vladivostok Port (Vladivostok Port) as a transit port for cross-border transportation of domestic trade goods, and to add two ports in Zhejiang Province as entry ports for cross-border transportation of domestic trade goods. Hunchun is located in the border area between China and Russia, and has the only railway and highway port in Jilin to Russia, with direct access to ports such as Vladivostok Port (Vladivostok Port).

In the previous announcement, the General Administration of Customs introduced the implementation background, stating that the Northeast region is an important production and reserve base for energy, raw materials, and commodity grains in China. Due to limited transportation capacity, it is difficult to transport materials from the Northeast region to the south in a timely manner. This not only becomes one of the main bottlenecks restricting the economic development of the region, but also makes it difficult for other regions in China to effectively utilize these important resources.

For many years, the General Administration of Customs has been paying close attention to the issue of "transportation of goods from the north to the south", actively coordinating with relevant competent departments on multiple occasions, and providing support and assistance for the case of domestic trade goods transported through international waters proposed by the Northeast Province. Considering the long-standing shortage of transportation capacity, the General Administration of Customs has also organized personnel to conduct investigations and research, explore the establishment of long-term mechanisms, and solve practical problems.

At the same time, in order to open up suitable transportation routes, the Heilongjiang Provincial Government has also organized relevant departments and enterprises to inspect the sea transportation channels in the Russian coastal area multiple times, and has reached a consensus with relevant Russian parties on transportation routes and ports.

On February 14, 2007, the General Administration of Customs issued the "Announcement of the General Administration of Customs on Carrying out the Pilot Work of Cross border Transport of Domestic Trade Goods" (No. 5 of 2007), deciding to carry out the pilot work of cross-border transport of domestic trade goods from March 1, 2007.

The pilot phase restricted ports and transportation routes. According to regulations, the pilot phase is only applicable to the management of domestic trade goods transported through Russian ports in Heilongjiang Province to ports along the southeast coast of China. During the pilot phase, the exit ports are limited to Suifenhe, the entry ports are limited to Shanghai, Ningbo, and Huangpu, and the Russian ports passing through are limited to Vladivostok Port (Vladivostok), Dongfang Port, and Nakhodka Port.

Why do domestic trade goods need to be transported across borders?

According to the science popularization released by the "Customs" in July 2017, for many years, due to the lack of sea ports and limited land transportation capacity in areas such as Heilongjiang and Jilin, it has been difficult for materials from the Northeast region to be transported to the south in a timely manner. In order to implement the national "the Belt and Road" initiative and solve the plight of commodity transportation in Northeast China, the General Administration of Customs has decided to carry out a pilot project for cross-border transportation of domestic trade goods. Some domestic trade goods can be "borrowed" from foreign ports and transported by sea to southern China for entry and sale at home. This not only solves the problem of transportation capacity, but also shortens the land transportation distance and can save a lot of freight. If the goods are transported from Suifen River in Heilongjiang to Taicang Port in Jiangsu, compared to traditional transportation methods, each container can save approximately 2000 yuan in shipping costs.

This measure will greatly alleviate the bottleneck problem of material transportation in Northeast China, improve the efficiency of material circulation, promote the economic development of Northeast China, enhance the convenience of regional trade, and inject new vitality into the revitalization of the old industrial base in Northeast China.

So, how is the management of transshipment materials in customs taxation?

The General Administration of Customs once answered in 2007 that cross-border transportation of domestic trade goods is a new development of traditional customs supervision business. Essentially, these goods are domestic trade goods and do not belong to traditional customs supervised goods. In principle, customs do not impose import and export tariffs or other taxes on domestic trade goods.

But its entry and exit involve customs supervision, therefore it belongs to the object of customs supervision, and customs should supervise it according to current regulations. Domestic trade goods transported across borders should arrive at the entry port within 3 months from the departure of the transportation vehicle from the exit port. If the goods have not arrived at the port of entry within the time limit, except for force majeure, they shall be considered as exported goods, and the taxpayer shall complete the relevant export declaration and tax payment procedures with the customs. Relevant operating enterprises shall not continue to engage in cross-border transportation of domestic trade goods, and customs may investigate and handle it according to the situation.

Afterwards, the General Administration of Customs has repeatedly adjusted policies related to the pilot work of cross-border transportation of domestic trade goods in Heilongjiang Province. For example, General Administration Announcement [2013] No. 61 stipulates that domestic trade goods transported cross-border from Heilongjiang Province to Shanghai, Ningbo, and Huangpu ports through Russian ports (Vladivostok Port, Dongfang Port, and Nakhodka Port) should be carried by Chinese international navigation vessels with priority. In the absence of Chinese nationality international navigation vessels to meet transportation needs, foreign nationality international navigation vessels are allowed to be used for transportation after being recorded by the Ministry of Transport.

According to Announcement [2016] No. 81 of the General Administration of Customs, in order to further expand the cross-border transportation business of domestic trade goods, promote the construction of the Eastern Land Sea Silk Road Economic Belt, and implement the national strategic deployment of revitalizing the old industrial base in Northeast China, the General Administration of Customs has decided to add Nansha Port, Yantian Port, Shekou Port, Fuzhou Port, Zhanjiang Port, Xiamen Port, and Taicang Port as the entry ports for cross-border transportation of domestic trade goods in Heilongjiang Province, Add Slavyanka Port in Russia as a transit port. The remaining matters shall still be implemented in accordance with the Announcement No. 5 of 2007, No. 21 of 2011, No. 61 of 2013, and No. 22 of 2015 of the General Administration of Customs.