Laws of the People's Republic of China

The State Administration of Foreign Exchange

Circular of the State Administration of Foreign Exchange on Problems Concerning Management of Foreign Exchange Income and Expenditures of International Maritime Transport

HuiFa [2001] No.58

April 28, 2001

All Sub-bureaus of the State Administration of Foreign Exchange, the Beijing and Chongqing Foreign Exchange Departments, Dalian, Qingdao, Ningbo, Xiamen and Shenzhen Sub-bureaus and All Designated Foreign Exchange Banks:

To further expand international maritime transport and standardize management of international maritime transport foreign exchange income and expenditures, we issue the following circular on problems concerning exchange purchase and payment and foreign exchange account management related to international maritime transport:

1.

Enterprises with power to engage in import and export (hereinafter referred to as the cargo owners) which are approved by the departments of foreign trade and economic cooperation can use exchange from their foreign exchange accounts or go to designated foreign exchange banks to purchase exchange to pay shipping fees and relevant fees in international trade to international shipping agencies (hereinafter referred to as the shipping agencies) engaged in international shipping agency in China which are approved by the departments of communications, or international shipping companies (hereinafter referred to as the shipping companies) engaged in international cargo transport which are approved by the departments of communications, or domestic exclusively shipping companies with foreign investment. Cargo owners can entrust international cargo transport agencies (hereinafter referred to as the cargo agencies) engaged in international cargo transport agency which are approved by the departments of foreign trade and economic cooperation to pay shipping fees on behalf of them.

Cargo owners cannot directly pay shipping fees and relevant fees in international trade to overseas shipping enterprises. Overseas shipping companies must entrust domestic shipping agencies or domestic exclusively shipping companies with foreign investment to first handle relevant formalities for the shipping fees and relevant income obtained by them in China according to the Regulations on Collection of Tax from Shipping Income of Foreign Companies and then go through formalities for outward remittance.

2.

When cargo owners pay international shipping fees and relevant fees in international trade to cargo and shipping agencies, shipping companies and exclusively shipping companies with foreign investment in China, they shall apply to designated foreign exchange banks with the following receipts and documents and make payment from their foreign exchange accounts or purchase exchange to make payment. After designated foreign exchange banks verify them, formalities for exchange purchase and payment can be handled and the original exchange purchase and payment bills of special invoices of international shipping are preserved for five years for future reference.

(1)

Import or export contracts;

(2)

Special invoices of international shipping (for exchange purchase and payment bills, see the Attachment). Special invoices of international shipping refer to special invoices of international maritime transport and special invoices of international shipping agency prescribed according to the Circular on Problems Concerning Implementation of Special Invoices of International Maritime Transport (GuoShuiFa [2000] No. 9) issued by the State Administration of Taxation and the Ministry of Communications and the special invoices of international cargo transport agency prescribed according to the Circular on Adding Exchange Purchase and Payment Bills of Special Invoices of International Cargo Transport Agency (GuoShuiHan [2001]No. 155] issued by the State Administration of Taxation and the Ministry of Foreign Trade and Economic Cooperation.

3.

Cargo agencies can handle formalities for transfer of international shipping fees and relevant fees to domestic shipping agencies with special invoices of international shipping agency. Cargo and shipping agencies can handle formalities for transfer of international shipping fees and relevant fees to domestic shipping companies or exclusively shipping companies with foreign investment with special invoices of international maritime transport. Cargo and shipping agencies cannot purchase exchange to pay international shipping fees and relevant fees.

4.

Shipping companies shall use invoices, bills of payment and other documents to pay port charges, fuel costs and other shipping fees related to international shipping to overseas companies from their foreign exchange accounts, and they cannot purchase exchange to make payment.

5.

Through the approval of the State Administration of Foreign Exchange or its sub-bureaus (hereinafter referred to as the State Administration of Foreign Exchange), cargo and shipping agencies and shipping companies can open special foreign exchange accounts of international shipping.

6.

The income listed in the special foreign exchange accounts of international shipping opened by cargo and shipping agencies includes international shipping fees and relevant fees paid by domestic cargo owners, cargo and shipping agencies and international shipping fees and relevant fees from abroad. Expenditures include payment of international shipping fees and relevant fees to overseas companies and transfer of international shipping fees and relevant fees to domestic cargo and shipping agencies, shipping companies and exclusively shipping companies with foreign investment.

7.

The income listed in the special foreign exchange accounts of international shipping opened by shipping companies includes international shipping fees and relevant fees paid by domestic cargo owners and cargo and shipping agencies and international shipping fees and relevant fees from abroad. Expenditures include payment of port charges, fuel costs and relevant fees to overseas companies.

8.

Special foreign exchange accounts of international shipping opened by cargo and shipping companies and shipping companies shall be handled according to the relevant provisions of Chapter II of the Regulations on Management of Domestic Foreign Exchange Accounts.

9.

When cargo and shipping agencies and shipping companies open special foreign exchange accounts of international shipping, the State Administration of Foreign Exchange determines ceilings for these accounts according to three times of the average monthly sums of exchange to be used in the preceding year and clearly writes them on the Certificate for Use of Foreign Exchange Accounts. Ceilings for accounts of newly established cargo and shipping agencies and shipping companies can be determined with reference to those ceilings for similar enterprises according to the same regulations. The State Administration of Foreign Exchange adjusts ceilings for accounts on a yearly basis.

10.

The opening and use of foreign exchange accounts and the determination of ceilings for exclusively shipping companies with foreign investment shall be handled according to provisions on management foreign exchange accounts of enterprises with foreign investment in the Regulations on Management of Domestic Foreign Exchange Accounts and other regulations.

11.

If foreign exchange income of cargo and shipping agencies, shipping companies and exclusively shipping companies with foreign investment exceeds ceilings for foreign exchange accounts, they shall handle exchange settlement within five working days. If they fail to do so after the specified date, banks of deposit shall report this to local bureaus of foreign exchange and local bureaus of foreign exchange shall order them to handle exchange settlement.

12.

The State Administration of Foreign Exchange cooperates with the departments of foreign trade and economic cooperation and the departments of communications to check foreign exchange income and expenditures, exchange settlement, exchange sale and account-opening of domestic cargo and shipping agencies and shipping companies on a yearly basis. If the relevant provisions on foreign exchange control are violated, the State Administration of Foreign Exchange shall give punishment according to the Regulations on Foreign Exchange Control and other regulations.

13.

Designated foreign exchange banks and financial institutions for opening accounts shall handle formalities for foreign exchange income and expenditures, exchange settlement, exchange sale and account-opening for cargo and shipping agencies, shipping companies, exclusively shipping companies with foreign investment and cargo owners according to the provisions of the Circular and other regulations on foreign exchange control. If regulations are violated, the State Administration of Foreign Exchange shall give punishment according to the Regulations on Foreign Exchange Control and other regulations.

14.

The Circular will enter into force as of June 1, 2001. If the previous provisions run counter to the provisions of the Circular, the Circular shall prevail.

After the Circular is received, all sub-bureaus should transmit it to branches, banks with foreign investment and relevant departments under their jurisdiction as soon as possible. The head offices of all Chinese-capital designated foreign exchange banks should transmit it to branches under their jurisdiction as soon as possible. If problems arise in the implementation of the Circular, please report them to the State Administration of Foreign Exchange in a timely manner.

Attachment: Exchange Purchase and Payment Bills of Special Invoices of International Shipping (omitted)