Member Article

The General Administration of Customs (“GAC”) issued the Measures of the Customs of the People’s Republic of China on Duty free Shops and Duty Free Goods on 28 November 2005. The Notice, which became effective on 1 January 2006, governs the establishment of duty free shops and the import and sale of duty free goods. Establishment of duty free shops The Measures define an operator as an enterprise approved by the State Council or its authorised department which is qualified to engage in the sale of duty free goods. In order to establish a duty free shop, the operator shall submit an application to the GAC. The applicant must satisfy the following conditions: • it is an independent legal person; • it has the requisite sales outlets and supervised warehouse; • it has the requisite computer management system that allows it to provide Customs with information such as the movements of the duty free goods in and out of the warehouse and sales; • it has a certain operational scale; If the duty free shop is to be established in a port then the number of persons transiting through the port must be at least 50,000 per year; and • it has complete articles of association which include information on its cooperation agreements, business model, legal information, etc. and it has a complete internal financial control system. The location of the sales outlets of duty free shops must comply with Customs control requirements. The sales outlets of duty free shops in ports should be located in the restricted area and those of duty free shops on transportation vehicles inside the transportation vehicles. If duty free shops are located in cities, the place for collecting the goods shall be situated within the restricted areas of ports. Supervised warehouse The supervised warehouses where duty free goods are stored must satisfy certain requirements. They must have secured and restricted facilities, establish a dedicated warehouse management system, keep a record of monthly stock movements, employ dedicated management personnel and limit their use to the storing of the duty free goods of the duty free shop to which they belong. Duty free goods The Measures contain detailed rules regarding the import, warehousing and transfer of duty free goods. The operator shall be the importer of the duty free goods sold in its duty free shops. Spare parts and tools for maintenance, display desks and shelves for the duty free goods are to be imported in accordance with normal import procedures.