Hui Zong Fa [2006] No. 73

August 24, 2006

The branch and foreign exchange department of the State Administration of Foreign Exchange in each province, autonomous region and municipality directly under the Central Government, as well as the municipal branches of the State Administration of Foreign Exchange in Shenzhen, Dalian, Qingdao, Xiamen and Ningbo, and each Chinese-funded foreign exchange nominated bank,

With a view to adapting to the development situation of the service trade in China, facilitating the true demands of domestic institutions for the payment of foreign exchange on service trade, and improving the administration of foreign exchange on service trade, the State Administration of Foreign Exchange has decided to adjust the policies for the sale and payment of foreign exchange under part of the service trade. The circular in respect of the relevant issues are hereby given as follows:

I. The payment of freight fees and other relevant fees to foreign parties under international air transport and land transport shall be subject to the following provisions:

The party concerned, when paying the freight fees and other relevant fees for international air transport or land transport to an oversea institution at an equivalent value of not more than USD 50,000, or to an oversea individual at an equivalent value of not more than USD 5,000, may bring the contract (agreement) or the invoice (the advice note for payment) directly to the foreign exchange nominated bank to handle the procedures for purchase and payment of foreign exchange; if the amount of payment exceeds the aforesaid quota, the party concerned needs to bring the air transport or land transport list (fax) and the invoice (the advice note for payment) directly to the foreign exchange nominated bank to handle the procedures for purchase and payment of foreign exchange.

II. The payment of commissions to foreign parties under export trade shall be subject to the following provisions:

As regards the sale and payment of foreign exchange concerning a single sum of commission for exportation not exceeding 10% of the total contractual amount or exceeding the aforesaid proportion but not exceeding an equivalent value of USD 100,000, the party concerned may, upon the strength of relevant documents, directly go to the foreign exchange nominated bank to handle the procedures, and the foreign exchange nominated bank shall handle the procedures for sale and payment of foreign exchange after checking the authenticity. As for the sale and payment of foreign exchange concerning a commission above the aforesaid proportion and amount, the party concerned shall, upon the strength of relevant documents, apply to the branch or sub-branch of the State Administration of Foreign Exchange (hereinafter referred to as the foreign exchange bureau), and shall, after the local foreign exchange bureau has checked the authenticity, go to the foreign exchange nominated bank to handle the procedures for purchase and payment of foreign exchange upon the strength of the ratification document of the foreign exchange bureau. The foreign exchange bureau and the foreign exchange nominated bank shall, when going through the formalities for sale and payment of foreign exchange concerning the commission, check the commission agreement (export contract) and the advice note for collection (foreign exchange settlement voucher).

III. Where the captain of an international marine transport borrows and draws a single sum of cash in any foreign currency at an equivalent value of not more than USD 30,000, he may bring the relevant documents directly to the foreign exchange nominated bank to go through relevant formalities; if the single sum exceeds the equivalent value of USD 30,000, he shall bring the relevant documents to apply to the local foreign exchange bureau, and shall, after the local foreign exchange bureau has checked the authenticity, go to the foreign exchange nominated bank to go through relevant formalities upon the strength of the ratification document of the foreign exchange bureau.

IV. The domestic foreign exchange alienation under a contracted oversea engineering project shall be subject to the following provisions:

Where both the general contractor and the sub-contractor of a contracted oversea engineering project are domestic institutions, the general contractor may, when paying construction-undertaking costs to the sub-contractor, bring its Qualification Certificate of the People's Republic of China for Foreign Economic Cooperation, the contract (agreement) on contracted oversea engineering project, and the subcontracting contract (agreement) directly to the foreign exchange nominated bank to handle the procedures for domestic foreign exchange alienation.

The foreign exchange funds derived by a sub-contractor from alienation shall only be used to make payments to foreign parties, instead of being settled. If the sub-contractor needs to use the construction-undertaking costs for domestic purchase, etc., the domestic general contractor shall, after making the foreign exchange settlement of construction-undertaking costs, pay such money to the domestic sub-contractor in Renminbi. And both the parties shall not alien the foreign exchange between them within the territory of China.

V. Where the payment of advertisement fees is to an overseas or foreign party, the payer does not need to provide the relevant documents on entrusting a domestic advertisement company with the power of operating advertisements on foreign investors.

VI. Each foreign exchange nominated bank shall, subject to the requirements of the Circular of the State Administration of Foreign Exchange on the Relevant Issues concerning the Sale and Purchase of Foreign Exchange under Non-Trade Account That Has Not Been Clearly Described in the Existing Regulations (Hui Fa [2003] No. 35), continue to do a good job in filling out the Registration Form on the Sale and Purchase of Foreign Exchange under Special Non-Trade Account, and submit the aforesaid Form to the local foreign exchange bureau within 5 working days at the beginning of each quarter. All branches (foreign exchange administration departments) shall gather the information of their own respective jurisdictions in a timely manner, and do a good job in making statistics and analysis. Unless it is otherwise required by the State Administration of Foreign Exchange, they do not have to submit the statements on the gathered information to the State Administration of Foreign Exchange.

VII. The present Circular shall apply to bonded zones, export processing zones and other areas under special supervision of customs.

VIII. The present Circular shall come into force as of September 1, 2006. Where any previous provision is in conflict with the present Circular, the present Circular shall prevail.

Each branch shall, upon the receipt of the present Circular, forward it to the sub-branches, foreign-funded banks, urban commercial banks, and rural credit cooperation banks within their respective jurisdiction as soon as possible; the head office of each Chinese-funded foreign exchange nominated bank shall, upon the receipt of the present Circular, forward it to the branches and sub-branches within their respective jurisdictions as soon as possible. In the event of any question arisen during the process of implementation, please timely report it to the Current Account Administration Department of the State Administration of Foreign Exchange.

Contact Phone Number: 010-68402280