Tooling Ownership Registration under Chinese Law Rules
Foreign tooling held in Chinese factories demands explicit bailment deeds, metal serial tags, local VAT fapiao receipts, and PBOC credit registrations.
Processing Trade Equipment
Meaning
Machinery and production tools imported under duty-free or tax-deferred status by manufacturing enterprises in China are designated for the production of export-oriented goods. This processing trade equipment remains under the strict supervision of China Customs for a statutory control period of five years. During this timeframe, the factory cannot sell or mortgage the machinery without prior customs approval and the payment of corresponding duties.
This framework reduces the initial capital expenditure of foreign-invested manufacturers.
Import Procedure
Enterprises must apply for a processing trade manual and obtain an import license before bringing the machinery into the country. Customs officials verify the technical specifications to ensure they match the declared production volumes. The machinery is then released without the payment of import tariffs.
Supervision Constraint
The imported machinery must be installed and operated exclusively within the registered factory site specified in the customs manual. Random physical audits are conducted by customs inspectors to verify that the equipment is being used solely for the declared export contracts. Transferring the machinery to another processing factory requires a formal joint application and custom clearance.
Unauthorized movement of the assets triggers heavy fines and potential smuggling charges.
Deregistration Output
Once the five-year supervision period expires, the manufacturing enterprise must apply for a formal release of customs control. This process involves a final audit of the production volumes and the reconciliation of import manuals. Upon approval, the factory receives a deregistration certificate that transitions the assets to ordinary status.
The equipment can then be sold or disposed of in the domestic market without further tax liabilities.