Customs compliance opportunity: further optimization of the proactive disclosure system

While continuing to encourage enterprises to conduct self-inspection and rectification, the new rules further extend the applicable time limits and adjust the scope of disclosure, thereby releasing more compliance incentives.

One of the most notable changes is the further relaxation of the non-penalty time limit for tax-related and export tax refund-related violations. The previous preferential treatment, which applied only to Advanced Certified Enterprises (AEOs), is now extended to all enterprises. Under the new rules, if an enterprise proactively discloses such violations within one year of occurrence, no administrative penalty will be imposed - regardless of the tax amount or refund ratio involved.

For proactive disclosures made after one year but within two years, the existing rules remain unchanged. If the underpaid or unpaid tax amount does not exceed 30 percent of the payable tax or the total amount involved is below RMB 1 million, no administrative penalty will be imposed.

The new Announcement introduces a major relaxation for statistical violations. Enterprises that proactively disclose misreporting or inaccuracies in statistical filings will be fully exempt from penalties—without limitation on disclosure timing or case value. This effectively removes the entry barrier for such disclosures, encouraging companies to promptly correct mistakes and enhance the accuracy of their customs data.

The Announcement specifies five types of inspection and quarantine violations that may qualify for penalty exemption if the goods involved are of low value or the violations are deemed minor:

The Announcement retains existing policies such as late-payment interest reduction and exemption from negative credit records. It also reaffirms key restrictions, such as the definition of “same violation” and the rule that a second disclosure of the same violation within one year is not exempted, to prevent policy abuse.

The Chinese customs proactive disclosure regime has undergone several rounds of optimization in recent years - extending the penalty-free period from three months to six months, and now to one year, and expanding from case-value restrictions to near full exemptions in some categories. This evolution reflects the customs authority’s increasing responsiveness to business realities and its ongoing effort to reduce corporate compliance burdens while further improving the business environment.

The new regulation officially came into effect on 11 October 2025. To maximize the policy benefits, enterprises are advised to make full use of the one-year penalty exemption window by establishing a routine customs self-assessment mechanism. We recommend conducting comprehensive internal reviews quarterly or at least semi-annually to identify potential risks in a timely manner. Upon detecting any non-compliance, enterprises should promptly make a proactive disclosure to the customs authority to secure a favorable resolution. In addition, companies should conduct a comprehensive review of all key operational areas and establish internal control procedures covering customs compliance, to prevent the recurrence of the same violation within a short period.

Given the specific complexities of license-related disclosures, it is essential for internal departments to maintain effective communication and ensure a full understanding of all license arrangements and related fee payments. Companies should seize the one-time opportunity for proactive disclosure in such cases. Additionally, attention should be paid to the adjusted scope of inspection and quarantine violations, and regular internal training should be provided to reflect the latest changes.

Finally, while the extended penalty-free period provides greater flexibility, it should not be interpreted as a relaxation of compliance obligations. Enterprises are recommended to continuously monitor their customs and transfer pricing risks and to seek professional advice when needed to avoid missing the valuable disclosure window due to oversight or delay.