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China Customs Increases Cargo Inspections in Two Steps!

HiTouch 15 March 2018

China Customs in Dalian recently caught the city's biggest gang involving in 19.05 million yuan export tax refund fraud and its network covers almost half of China, including Beijing, Guangzhou, Shenzhen, Tianjin, etc. 


Two "zombie" companies provided enough fake Value-Added Tax (VAT) fapiao and trading documents to cheat on the Chinese government for export subsidies, China Customs no longer tolerant this grey industry.


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Image: Google


A Grey Industry in Export Created by So Many People!


Investigators found that it's the same boss behind the curtain controlling two zombies companies that mainly export coats to Russia. They have a national network of garment, fabric, leather factories in more than 10 cities to provide them with falsely-issued VAT fapiao. Investigators match up every payment transaction and the trading documents, found they use 74 bank accounts of 21 factories in making the payment transfer. 


Profits from cheating on export tax refund gather the factories, trading companies, shipping companies, freight forwarding, every participant lines up to contribute to this grey industry. They are more willing to make fake documents on export garment and furniture since the tax refund rate is higher, that is another reason why China Custom's cargo inspection on certain products is much stronger.


Watch Out! You May Unintentionally Take Part in This Grey Industry


Spending a few hundred yuan to pay for an agent under the name of an unknown company to export, is "buying documents", the Chinese terminology of this unsafe trading way.


In this activity, the agent can use fake VAT fapiao they collected before and the related documents of your cargoes to cheat on the government for export tax refund.


China Customs New Inspection System to Launch on May 1st 


Chinese government's measures to respond to illegal behaviors are always in time. Two steps to increase the inspection for export and import come out immediately.


1


According to the draft State institutional reform plan, the Inspection and Quarantine by Entry-Exit Inspection Department will be taken away from its current administrative institution General Administration of Quality Supervision(AQSIQ), and directly under the management of China Customs, while AQSIQ will be merged into State Market Regulatory Administration. This move further increases China Customs' power on cargo inspections. 


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2


When it comes to cargo inspections, according to an official document released by China Customs, a new upgraded system to rate the company according to their performance will be launch on May,1 st. How many credits a company earned decides the possibility of their cargoes being checked and whether they have preferential treatments when passing Customs.


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Image: Screenshot from the official website of China Customs


If you are holding the opinion that the credit system will not directly affect your business, since you export through an agent, actually, it's wrong. Alibaba's freight forwarding companies OneTouch was blacklisted by China Customs in early March, their customers, those export by the name of OneTouch are unfortunately involved, more time wasting on passing Customs, endless investigation and questions raised by the officers. 


The reality is companies with high credit only have 20% rate in cargo inspections, and enjoy preferential treatments when passing Customs on some occasions, while the low credit companies have 80% rate in cargo inspections.


It is a risk when you choosing buying documents to export with a low rated agent. If you neither have Export and Import License nor VAT fapiao, how to do the trading business in a legal way? Contact us if you need any services on trading.


Source: China Customs, Xinhua