The key points are:

1. Shifting the primary focus of customs audits

The Revision Draft gradually shifts the focus of customs audits from ‘examination’ to ‘management.’ Instead of making detailed examinations of company accounts, documents and goods, customs will make an overall assessment of the company itself and its risk management capability. Customs will no longer rely exclusively on the follow up supervision, instead it will pre-assess the credit status and risk status of its imports/exports, and conduct post-import/export reviews to verify the accuracy and propriety of its import and export activities.

The following two aspects of the new customs audit guidelines are particularly relevant to enterprises:

• Establishing an enterprise self-discipline system
  Article 11 of the Revision Draft stipulates that: “A company under audit shall carry out self-compliance management on their operations may report any instances of non-compliance to the customs and take prompt corrective action. In such cases, administrative penalties will be reduced or may be waived particularly for minor torts that are quickly corrected and do not result in any damages.”

• Establishing an internal control system according to customs requirements
  Article 9 provides stipulates that: “Companies under audit shall establish an import/export internal control system according to the customs requirements and accept customs supervision and inspection.”

2. Protection of the legitimate rights and interests of audits

The Revision Draft protects the legitimate rights and interests of companies being audited by standardising the notification and review procedures. Article 21 stipulates that: “Customs shall inform the auditees of the facts obtained through customs audit before reaching an audit conclusion; companies who have objections shall express their opinion to the customs within seven days from the date that the information is issued to them.” This provision protects the companies’ right to know the legal basis for any administrative enforcement, as well as their right to reply and prepare a defense. Furthermore, Article 22 stipulates that: “Customs shall review any facts that are questioned by the companies being audited and any reasonable explanations raised by the auditees shall be accepted by Customs.’

3. Transforming customs functions and improving management efficiency

The “Revision Draft” introduces a legal provision allowing third party intermediaries to conduct customs audits. The notion of enlisting third party intermediaries to assist in customs enforcement is not new. Third parties were already allowed when the Measures of the Customs of the People's Republic of China on Inspection of Bonded Zone Operations were issued by the General Administration of Customs (GAC) and took effect on 1 June 2008. It has accumulated rich experiences for the involvement of third party intermediaries to the local customs audits in the early years. Customs will publish the qualifications and management regulations regarding the third party intermediaries at a later date.