Laws of the People's Republic of China

State Administration of Foreign Exchange

Circular of the State Administration of Foreign Exchange on Strengthening the Supervision over Verification and Writing-off of the Export Proceeds in Foreign Exchange

Hui Fa [2004] No. 98

September 30, 2004

To the branch offices of the State Administration of Foreign Exchange and the departments for foreign exchange control of various provinces, autonomous regions and municipalities directly under the Central Government, and the branch offices of the State Administration of Foreign Exchange of municipalities of Shenzhen, Dalian, Qingdao, Xiamen and Ningbo; and to the various designated foreign exchange banks with Chinese investment:

Recently some local branch offices have in succession reported the acts of some enterprises're-selling instruments for verification and writing-off of the export proceeds in foreign exchange within their jurisdiction. Moreover, departments concerned reported to the State Council that some people in Zhejiang, Jiangxi and Sichuan were defrauding the State of the refunded tax in the name of earning foreign exchange through exports by acquiring a lot of dollars and then depositing such dollars into accounts of export enterprises. In view of these circumstances, related leaders of the State Council have given an official reply of great importance, requiring relevant departments to promptly conduct investigation together and improve the administration. Therefore, the State Administration of Foreign Exchange hereby notify related matters on further strengthening the supervision over the verification and writing-off of export proceeds in foreign exchange as follows:

1.

On the precondition of continuous support to trade facilitation, the administration of the issuance of instruments for verification and writing- off of the export proceeds in foreign exchange shall be strengthened in strict accordance with related provisions of the Implementation of the Measures for the Administration of Verification and Writing-off of the Export Proceeds in foreign Exchange, especially to focus on the supervision over export enterprises that collect the said instruments in a large quantity and quite frequently, and to trace and urge such enterprises to deal with verification and writing-off of export proceeds in foreign exchange in time. Local branch offices of the State Administration of Foreign Exchange shall be on the alert, in time report abnormalities during the collection of the said instruments by export enterprises, conduct investigation and verification thereafter and take steps to handle the problems that are found in violation of provisions, if any.

2.

Local branch offices of the State Administration of Foreign Exchange shall take one step ahead in strengthening the administration of export items that require settlement with foreign currency notes by urging banks to handle the formalities of exchange settlement and entry into account in terms of exchange collection under export items in strict compliance with Article 27 of the Rules for the Implementation of the Measures for the Administration of Verification and Writing-off of the Export Proceeds in foreign Exchange.. Should exchange settlement or entry into account be prohibited to be effected by foreign currency notes according to provisions, no banks may issue coupons special for verification and writing-off of the export proceeds in foreign exchange to export enterprises for handling formalities of verification and writing-off of the export proceeds in foreign exchange.

3.

Personnel at the counter of branch offices of the State Administration of Foreign Exchange shall, upon handling the formalities of verification and writing-off of the export proceeds in foreign exchange for export enterprises, strictly observe related internal control system and deal with businesses according to specified procedure; shall pay attention to examine with due care the pertinent certificates submitted by export enterprises so as to ensure the truthfulness and completeness of instruments for verification and writing-off, and conduct data post record by hand according to provisions as well as review such data.

4.

Branch offices of the State Administration of Foreign Exchange of all localities shall, under the leadership of the People's Banks in places where such offices are located, consciously and initiatively strengthen the inspection and supervision over the compliance of business concerning verification and writing-off of the export proceeds in foreign exchange, which is handled inside such offices, and shall, according to internal control system, organize to well conduct spot check and audit after verifying and canceling counter service, establish and improve internal audit system and carry out supervision over verification and writing-off in strict accordance with the relevant provisions laid down in the Measures for the Administration of Verification and Writing-off of the Export proceeds in foreign exchange. In case of many failings in the administration as a result of non-compliance with provisions, personnel responsible therefor shall be investigated subject to related provisions.

5.

Branch offices of the State Administration of Foreign Exchange of all localities shall issue coupons special for tax refund on the verification and writing-off of the export proceeds in foreign exchange, actively carry out close cooperation with the Customs and tax authorities in plugging up loopholes of verification and writing-off of the export proceeds in foreign exchange and tax refund.

6.

Local branch offices of the State Administration of Foreign Exchange of all localities shall, upon the receipt of this Circular, transmit it to sub-braches in areas under their jurisdiction, carefully organize and implement it and promptly report to the State Administration of Foreign Exchange any new situation or problem occurred in the verification and writing-off of the export proceeds in foreign exchange within the aforesaid areas.