State Administration of Foreign Exchange to Adjust Administration of Foreign Debt Registration Under Trade in Goods
On December 23, 2008, the State Administration of Foreign Exchange ("SAFE") issued a circular (the "Circular"), effective on the same date, to adjust the administration of foreign debt registration under trade in goods. The Circular loosens restrictions on the amount of prepayment in exports and the deferred payments in imports in several aspects. Both the proportion of prepayment in export of goods and the proportion of deferred payment in import of goods are increased from 10% to 25%, provided that SAFE may still adjust these proportions applicable to certain types of enterprises (e.g. enterprises engaged in the manufacturing of large sets of equipment) to an even higher level. SAFE may adjust the proportions upon the application to enterprises with good credit, no violations of foreign exchange regulations and strict compliance with trade credit registration. The above-mentioned proportions are only applicable to registered prepayment and deferred payments in excess of $30,000. The Circular aims to promote export and import without abandoning supervision of foreign debts under trade in goods, partially in response to the adverse impacts created by the recent global financial crisis.
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