Insights

Chinese companies, including Chinese subsidiaries of multinational companies, are seeing returns of previously exported goods for many COVID-19 related reasons, including the suspension of contractual obligations under force majeure provisions. China is now helping affected companies with new tax and duty relief. China Customs announced on November 2, 2020, that the State Council has approved tax rebates for goods returned due to COVID-19. For goods that were exported from January 1, 2020 to December 31, 2020, the exporters will not be required to pay import duties, import value-added tax (“Import VAT”), and consumption tax on goods that are returned to China within one year of export (“Qualified Returned Goods”). Export duties paid on the goods will also be refunded to affected exporters.

For the first time in nearly two decades, China is revamping its export control regime and issuing its first unified Export Control Law, which combines concepts from more than a dozen existing Chinese laws and related regulations. This alert summarizes the most significant changes from current Chinese export control practice, highlights what may be included in the pending Export Control Law, and comments on anticipated impact on businesses operating in China. We also provide some recommended approaches for companies with China operations (or rely on third parties in China) to consider in advance of implementation of the Export Control Law.