WORLD TRADE
ORGANIZATIONG/VAL/N/1/CHN/3
24 September 2003
(03-5058)
Committee on Customs Valuation Original:  English
NOTIFICATIONS UNDER ARTICLE 22 OF THE AGREEMENT ON
IMPLEMENTATION OF ARTICLE VII OF THE GENERAL
AGREEMENT ON TARIFFS AND TRADE 1994
PEOPLE'S REPUBLIC OF CHINA
The following communication, dated 23 September 2003, has been received from the
Permanent Mission of the People's Republic of China.
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Pursuant to Article 22 of the Agreement on Implementation of Article VII of GATT 1994,
and in accordance with the Decision of the Committee on Customs Valuation of 12 May 1995, thePermanent Mission of the People's Republic of China has the honor to notify the Committee on
Customs Valuation of the following administrative measure in China regarding Customs Valuation:
The Customs Regulations of the People’s Republic of China Regarding Determination on
Customs Value of Royalties and License Fees Related to the Imported Goods 
1
The above-mentioned administrative measure is authentic in the Chinese language only.
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Decree of the General Administration of Customs of the People’s Republic of China
The Customs Regulations of the People’s Republic of China Regarding Determination on
Customs Value of Royalties and License Fees Related to the Imported Goods adopted by the
Directorate of the Executives of the General Administration of Customs on May 29, 2003 is hereby
promulgated and shall enter into force as of July 1, 2003, whereupon the Provisional Regulations of
Customs of the People’s Republic of China Regarding the Collection or Exemption of Customs
Duties of Software Fees Related to the Imported Goods promulgated on January 8, 1993 shall beannulled therefrom.
Approved by
Mou Xinsheng,
Commissioner of the General
Administration of Customs
         May 30, 2003
                                                     
1 In English only.G/VAL/N/1/CHN/3
Page 2
The Customs Regulations of the People’s Republic of China Regarding Determination on
Customs Value of Royalties and License Fees Related to the Imported Goods
Article 1 The present regulations are formulated with a view to standardizing the customs
valuation of royalties and license fees related to the imported goods in accordance with the Customs
Law of the People’s Republic of China and the Customs Regulations on Import and Export Tariff of
the People’s Republic of China .
Article 2  For the purpose of the present regulations, the term “royalties and license fees” shall
be taken to mean  particular payments made by the buyer of the imported goods in respect to rights of
patent, trademark, know-how, copyright as well as other rights, including:
(1) those for the right of patent;
(2) those for the right of trademark;
(3) those for the copyright;
(4) those for the right of know-how;
(5) those for the right to distribute and resell; and
(6) those for other similar rights.
Article 3  Royalties and license fees shall be added to the customs value of imported goods
provided the payments meet both the following conditions:
(1) being related to the imported goods being valued; and
(2) being made by the seller as a condition for the sale of the concerned goods to the customs
territory of the People’s Republic of China
Article 4  Royalties and license fees in accordance with the provisions of articles 5 through 8
shall be deemed to be related to the imported goods.
Article 5 Royalties and license fees are paid for the rights of patent or know-how, where the
imported goods belong to any one of the following cases:
(1) goods containing patent or know-how;
(2) goods produced under patent or know-how; or
(3) machines and/or equipments specially designed and/or manufactured to perform the
patented process or know-how.
Where the patent or know-how is imported in the form of magnetic tapes and disks, CDs or
other similar media, whether downloaded from network,  or transmitted via satellite, it shall be deemed
to be related to the imported goods in terms of the above provisions.
Article 6 Royalties and license fees are paid for the right of trademark, where imported goods
belong to any one of the following cases:
(1) imported goods bearing trademark;
(2) imported goods that can be resold directly with the trademark affixed after importation; or
(3) goods that contains the right of trademark as being imported, and could be resold with the
trademark affixed after minor processing.
Article 7  Royalties and license fees are paid for the copyright, where imported goods belong to
any one of the following cases:G/VAL/N/1/CHN/3
Page 3
(1) imported goods containing software, words, music, pictures, images and other similar
contents, which are in forms of magnetic tapes and disks, CDs and other similar media; or
(2) imported goods containing other copyrighted contents.
Article 8  Royalties and license fees are paid for the rights to distribute, resell or other similar
rights owned by the seller of the imported goods in the customs territory of the People’s Republic of
China, where imported goods belong to either of the following cases:
(1) goods that could be sold directly after importation; or
(2) goods that could be resold directly after minor processing.
Article 9 It shall be considered satisfactory to the provisions of Article 3(2) of the present
regulations where the payments for royalties and license fees being a condition of the seller for the
sale of the imported goods to the customs territory of the People’s Republic of China, which means
that transaction will not be concluded under the terms and conditions set forth in the sales agreement
without such payments.
Article 10  In case that royalties and license fees constitute part of the customs value, they shall
be levied at the tariff rate of the imported goods concerned.
Article 11 As the importer presents declaration of imported goods, he shall also declare to the
customs the royalties and license fees paid in any form, and submit objective and quantifiable data atthe same time.
Where royalties or license fees paid by the importer are in accordance with the provisions of
Article 3 of the present regulations, they shall be added to the customs value of the imported goods.
The customs shall examine and approve the payments based on the objective and quantifiable datasupplied, and determine the customs value of the imported goods accordingly. Where the importer
fails to furnish the related data, or the data supplied are neither objective nor quantifiable, the customs
value of the imported goods shall be determined in accordance with the provisions of Customs
Regulations of the People’s Republic of China Regarding the Determination of Customs Value of
Imported and Exported Goods .
Where the evidence and information supplied by the importer are not in line with the
provisions of Article 3 of the present regulations, such royalties or license fees shall not be added to
the customs value of imported goods after the examination by the Customs .Such royalties and fees
shall be deducted if the customs value declared by the importer has already covered them. In case the
royalties and license fees declared are not listed separately, or can not be ascertained on the basis of
the evidence and information supplied, they shall not be deducted.
Article 12  Where only a part of the total payment of the royalties and license fees is in line with
the provisions of Article 3 of the present regulations, or the payment of royalties or license fees is
only related to part of the imported goods, the related part thereof shall, in accordance with generally
accepted accounting principles, be calculated properly and added to the customs value based onobjective and quantifiable criteria.
Article 13  In determining the customs value of the imported goods, the following charges shall
not be added to the customs value of the imported goods concerned, provided that they have been
listed separately and have been examined and approved by the customs:
(1) charges for reproducing the imported goods in the customs territory of the People’s
Republic of China; or
(2) charges for technical training and study tour abroad.G/VAL/N/1/CHN/3
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In case that the charges thereabove have been included in the customs value declared by the
importer , they shall be deducted.  Where such charges have not been listed separately, and cannot be
proved by the evidence and information supplied by the importer, they shall not be deducted.
Article 14  The importer of imported goods who violates the present regulations, fails to present
accurate declaration, or submit false, fictitious or fraudulent declaration of royalties or license fees,
shall be punished by the customs in accordance with the Customs Law of the People’s Republic of
China and the Implementing Regulations on Imposing Ad ministrative Penalties under the Customs
Law of the People’s Republic of China . Where the violation constitutes a crime, the importer
concerned shall be subject to criminal liability in accordance with the relevant laws.
Article 15  For the purpose of the present regulations:
The term “payment(s) made ”means the full amount of all the royalties or license fees paid by
the buyer in various ways, including those actually paid or payable.
The term “software” means any programs or documents used by data processing equipments
under the Provisions of Regulations Regar ding Protection of Computer Software.
The term “know-how” means any undisclosed know ledge, experience, methods, techniques and
skills concerning technological process, formula, product design, quality control, examination and
test, marketing management, etc., expressed in forms of blueprints, models, technical data andstandards.
The term “charge for technical training” means all the expenses, including tuition, board and
lodging, traffic and medical care, paid by the buyer of the imported goods for technical training
offered by seller or a third party related solely to technicians assigned by the buyer.
The term “minor processing” means diluting, mixing, sorting, primary assembling, repacking,
and other similar processing.
Article 16  The General Administration of Customs of the People’s Republic of China shall be
entitled to construing and interpreting the present regulations.
Article 17 The present regulations shall enter into force as of July 1, 2003. Whereupon the
Provisional Regulations of Cust oms of the People’s Republic of China Regarding the Collection or
Exemption of Customs Duties of Softwar e Fees Related to the Imported Goods  promulgated on
January 8,1993 shall be annulled therefrom.
(The English text there-above is for reference only. For legal purposes, please refer to the Chinese
version.)
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