Understanding the Hong Kong customs and trade environment

The Hong Kong Special Administration Region of the People’s Republic of China is a free port and does not levy customs tariffs on import, impose tariff quotas or surcharges and there is no system of value added tax or equivalent. This makes Hong Kong a popular trading hub for the Asia Pacific region and it is frequently used as a gateway to southern China. Consequently, many of the customs and trade challenges faced by companies are to do with managing transit, transshipment and temporary importation.

Excise duties are levied on four types of goods, irrespective of whether they are imported or locally manufactured. These goods are liquors, tobacco, hydrocarbon oil and methyl alcohol. For tobacco, hydrocarbon oil and methyl alcohol, duties are charged at specific rates per unit quantity. For liquors, duty is assessed at different percentages of their values on the basis of three different categories defined broadly according to alcoholic strength.

Traders usually interact with the following three major authorities when undertaking import or export activities:

  • Customs and Excise Department: Responsible for the enforcement of Customs and trade laws, trade facilitation schemes, consumer protection, goods and documents inspection, trade controls and the collection of import related taxes in Hong Kong.
  • Census and Statistics Department: Responsible for trade administration (including administration of trade declarations and cargo manifests) and management of trade and cargo statistics.
  • Trade and Industry Department: Responsible for facilitating the development of trade policies and foreign trade relations as well as maintaining trade security measures including import/ export licensing and export controls.


Our services

Hong Kong services include

  • Utilising CEPA for preferential treatments (e.g. zero-tariff application, origin certification) on goods exported from Hong Kong to China
  • Utilising Free Trade Agreements that do not include Hong Kong as a signatory country, while using Hong Kong as a regional hub for goods consolidation, such as the application of Certificates of Non-manipulation
  • Facilitating First Sale for Export to the US or EU – achieve duty savings through using a Hong Kong enterprise as middleman
  • Enhance compliance with export control rules and regulations in Hong Kong and China

Being a major gateway to Southern China and the base of a vast number of regional headquarters of MNCs, our Customs and international trade practice provides a wide range of tailored solutions in Hong Kong and through leveraging our local China specialists within our network.

Regional management of the customs and trade function

As many organisations house their regional management of the customs and trade function in Hong Kong, our team focuses on offer assistance in the requirements of this role, such as:

  • Risk profile assessments of entities throughout the region
  • “Trade Intelligence Plus”: dedicated knowledge provision services of developments in trade and customs requirements around the region
  • Design, review and standardisation of processes and procedures
  • Centralised training

Creating value

  • Customs supply-chain business modelling

Ensuring compliance

  • Customs valuation (e.g. transfer pricing documentation, obtaining advanced ruling)
  • Tariff classification (e.g. technical analysis)

Managing risk

  • Setting up best-in-class operating procedures

Case studies

Audit of China processing trade entity of a Hong Kong principal on its import and export activities

WMS assisted the Hong Kong principal to approach the audit case strategically in order to avoid suspension of manufacturing activities at the processing trade entity.

How we helped

  • Aligned appropriate documents to be presented to Customs for investigation
  • Assessed exposure arising from Customs handbook imbalance and other risk areas and advised on mitigating strategies
  • Provided strategies, technical information and regulations to support the negotiation process with Customs to minimise the duty and tax exposure arising from the audit case
  • Compliance review to identify areas of customs and trade non-compliance risk for the China processing trade entity

Benefit for the client

  • Rectified non-compliant customs operations through on-site practical assistance
  • Set-up best-in-class operational procedures to improve customs operations on an on-going basis

Cost savings opportunities for sales from ASEAN to the United States, European Union and China through a Hong Kong sourcing hub

WMS assisted the client to capture and materialise cost saving opportunities through utilising and implementing the following:

First Sale for Export (FSFE) for sales made to United States and European Union

  • Led a feasibility study on the supply chain structure and access if documentary trail is sufficient to meet FSFE requirements
  • Submitted application for FSFE to US/ EU Customs authorities and use first sale price as dutiable basis
  • Implementation review of FSFE supply chain and monitored post-implementation process

ASEAN-China Free Trade Agreement (ACFTA) for sales made to China

  • Assessed whether goods sourced from ASEAN countries met the rules of origin prescribed under the ACFTA and the likelihood of the successful application for a preferential Certificate of Origin and advised on the necessary processing structure to meet such rules
  • Advised on the requirements to obtain the Certificate of Non-Manipulation in Hong Kong to substantiate the non-processing of ASEAN-originated goods when passing through the Hong Kong hub
  • Assessed whether other provisions under ACFTA were met including direct consignment and minimal processing
  • Implementation support including ensuring documentation could adequately support preferential treatment upon importation into China.

Location study for hub establishment

  • Completed a study on potential hub relocation options such as Singapore and China bonded / free trade zones to achieve potential cost-savings
  • Feasibility report on utilising e-commerce

Contact us

Ryan Wu

South China (incl. Hong Kong SAR), PwC Asia Pacific Customs and Trade

Tel: +86 0755 8261 8891

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