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Free Trade Port (FTP) Administrative Measures, issued by the GAC and took effect on 3 October 2007

1.  What is an FTP?

An FTP is a customs supervised area established within a port open to overseas and a special customs zone connecting to the port, with the functions of a port, logistics and processing.

2.  What activities are allowed in an FTP?

The following activities are allowed:

() storing exported/imported goods that have not completed customs formalities;

() foreign trade, including international entrepot trade;

() international procurement, distribution and delivery;

() international transit;

() testing and after-sale service;

() merchandise display;

() R&D, processing and manufacturing;

() ports operating; and

() others as approved by Customs.

 3. Are there any rules or requirements that enterprises within an FTP must comply with?

() Enterprises within an FTP should be a legal person with the liability to pay tax etc. Enterprises outside an FTP can establish branches inside an FTP.

() Goods restricted from import/export cannot enter/exit an FTP.

() Enterprises should comply with the industry development requirement. Goods listed in the Restricted List cannot be produced inside an FTP.

() The entry-exit of goods should be completed with the in-change FTP Customs. Customs duties and related non-tariff barriers apply for General Trade movements from an FTP to the domestic market.

() Goods lost and damaged should be reported to Customs, and relevant procedure followed.

() Enterprises should file with Customs annually if the storage period exceeds 2 years.

4. What are the advantages of setting up enterprises in an FTP?

() Except where otherwise stated, goods from overseas shall be exempt from customs duties (including machinery, equipment, production plants and storage facilities used for infrastructure construction; machinery, equipment, and spare parts used by enterprises; articles for office self-use).

() Scrap, waste, and packaging material for production, storing, delivery during manufacturing can be disposed of domestically, subject to Customs approval and duty assessment.

() Preferential Free Trade Agreements can still be used, subject to meeting the origin rules.

() Monthly declarations may take place, subject to Customs approval.

() Goods from China entering an FTP should be “deemed export” and eligible for export VAT refund.

() Exhibition activities can take place, subject to Customs approval.

() Goods within FTP can be freely circulated.

() Enterprises who engage in the dangerous chemicals are allowed.

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