Management of foreign currency banknotes for duty-free goods sales | govt.chinadaily.com.cn

Management of foreign currency banknotes for duty-free goods sales

Updated: Dec 9, 2018 govt.chinadaily.com.cn Print

First, Article 8 of the Notice of the State Administration of Foreign Exchange on Relevant Issues Concerning Foreign Exchange Administration on Duty-free Commodities ([2006] No 16, SAFE, hereinafter referred to as "No 16 Document") clearly stipulates: "The foreign currency banknotes for duty-free goods sales by duty-free commodity operating units and duty-free shops can be deposited into their foreign exchange accounts under current account."

Second, in accordance with Article 6 of the Notice of the State Administration of Foreign Exchange on Issuing the Measures for the Administration of Domestic Institutions' Receipt and Payment of Foreign Currency Banknotes ([2015] No 47, SAFE, hereinafter referred to as “No 47 Document”): "Except as otherwise provided for in these Measures, domestic institutions may collect foreign currency banknotes for transactions under current account satisfying the following conditions, but shall go through procedures for foreign exchange settlement at the handling banks as required, and may not transfer the foreign currency banknotes into spot exchange by depositing them in the handling banks."

The "Measures" clarify that under the following four circumstances domestic institutions may collect foreign currency banknotes: ① current account transactions that are not accessible to banks; ② service trade transactions with countries (regions) in war and with bad financial conditions; ③ service and supply fees paid due to temporary use of domestic port and other transportation facilities by foreign institutions or overseas individuals; ④ the foreign currency earnings for duty-free goods sales by domestic duty-free commodity operating units and duty-free shops.

Taking into account the special nature of domestic duty-free commodity operating units and duty-free shops and that they need to import duty-free goods while collecting foreign currency banknotes, the foreign currency banknotes they receive may enter their current account and they can retain the spot exchange. In view of the fact that the duty-free commodity operating units specified in No 16 Document still have the actual demand for collecting banknotes and retaining spot exchange, the regulation has been effective to date. Therefore, No 47 Document specifies, “except as otherwise provided for in these Measures”, the settlement of duty-free commodity operating units exchange shall be exempted (i.e. No 16 Document).

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