Index number:000014453-2017-00078 Dispatch date: 2017/01/26
Publish organization: State Administration of Foreign Exchange Reference number: Huifa No.3[2017]
Name: Circular of the State Administration of Foreign Exchange on Further Advancing Foreign Exchange Administration Reform to Enhance Authenticity and Compliance Reviews


Circular of the State Administration of Foreign Exchange on Further Advancing Foreign Exchange Administration Reform to Enhance Authenticity and Compliance Reviews

The branches and foreign exchange administration departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions, and municipalities directly under the Central Government, the SAFE branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo, and all designated Chinese-funded foreign exchange banks

To further deepen the foreign exchange administration reform, streamline administration and delegate powers, support the development of the real economy, promote trade and investment facilitation, and build and refine the capital flow management system under the macro-prudential management framework, we hereby provide notification on the relevant measures as follows:

I. Expanding the scope of foreign exchange settlements for domestic foreign exchange loans. Foreign exchange settlements will be allowed for domestic foreign exchange loans for exports under trade in goods. Domestic institutions shall repay the loans with foreign exchange proceeds from exports under trade in goods, and in principle, they are not allowed to make repayment through buying foreign exchange.

II. Allowing funds for overseas loans under domestic guarantees to be transferred back for domestic use. Debtors can transfer back, directly or indirectly, the funds under guarantees for domestic use through issuing loans to or equity participation in domestic institutions. Where the performance of guarantee occurs to a bank for overseas loans under domestic guarantees, the relevant foreign exchange settlements and sales will be included in the management of its own settlements and sales of foreign exchange.

III. Providing further convenience for centralized operation and management of foreign exchange funds by multinationals. Under the principle of macro-prudential management, the share of the deposits attracted by domestic banks through the international foreign exchange master account for domestic use will be adjusted from being no higher than 50% of the daily average balance of deposits over the last 6 months into 100%; and the funds for domestic use shall not use the quota for outstanding short-term external debt.

IV. Allowing overseas institutions in pilot free trade zones to have their foreign exchange settled through the non-resident account. Where RMB is transferred for domestic use after settlements of foreign exchange, domestic banks shall first review the valid commercial documents and vouchers of domestic institutions and individuals concerned, in accordance with the relevant provisions on cross-border deals.

V. Further standardizing foreign exchange administration for trade in goods. Domestic institutions shall undergo the procedures of foreign exchange receipts and payments under trade in the principle of "whoever exports shall receive foreign exchange, and whoever imports shall make payments". They are required to go through the procedures of foreign exchange receipts on time, unless otherwise specified by the SAFE.

VI. Enhancing statistics collection of foreign exchange revenues under the current account that are deposited overseas. Where a domestic institution deposits overseas its export revenues or revenues from trade in services, but fails to undergo registration and filing procedures for foreign exchange administration or report relevant information in accordance with the Circular of the SAFE on Printing and Distributing the Regulations on Foreign Exchange Administration for Trade in Goods (Huifa No. 38 [2012]), and the Circular of the SAFE on Printing and Distributing the Regulations on Foreign Exchange Administration for Trade in Services (Huifa No. 30 [2013]), the domestic institution shall report relevant information within one month after the release of this Circular.

VII. Continuing to perform and refine the outward remittance administration policy for foreign exchange profits under ODI. In handling outward remittances of profits in the amount equivalent to USD 50,000 (exclusive) for domestic institutions, banks shall review the profit distribution resolution of the board of directors (or the partners), the original tax return filing form, and audited financial statements that are related to this outward remittance of the profits and affix the seal and endorsement to the original tax return filing form indicating the amount and date of the remittance. The domestic institution shall make up for the losses incurred in previous years before remitting the profits overseas.

VIII. Enhancing authenticity and compliance reviews for ODI. When going through ODI registration and outward remittance procedures, a domestic institution shall explain to the bank the sources and purposes (use plan) of the investment funds, and present to the bank the resolutions of the board of directors (or of the partners), contracts and other authenticity evidencing materials, in addition to submitting relevant review materials as required. Banks shall enhance authenticity and compliance reviews under the business operation principles.

IX. Adopting the management of full-scale overseas loans in domestic and foreign currencies. In issuing overseas loans, a domestic institution shall make sure the sum of the outstanding overseas loans in the domestic currency and those in foreign currencies is no higher than 30% of its owner's equity in the audited financial statements for the previous year.

X. Any violation of this Circular will be subject to legal punishments by the SAFE in accordance with the Regulations of the People's Republic of China on Foreign Exchange Administration.

XI. This Circular will be implemented as of the date of promulgation, and interpreted by the SAFE. The SAFE will regularly assess the outcomes of policy implementation and make adjustments in line with the balance of payments. This Circular shall prevail where there are inconsistencies between previous provisions and this Circular.

Upon receipt of this Circular, the branches and foreign exchange administration departments shall immediately forward it to the central sub-branches, sub-branches and designated foreign exchange banks within your respective jurisdiction for implementation.

 




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State Administration of Foreign Exchange
Addess:Huarong Plaza, No.18 in Fucheng Road, Haidian District, Beijing
Postcode:100048 Informants'hot-line telephone:+86-10-68402265