Bonded Processing

Bonded Processing refers to a processing trade method in which an enterprise, with customs approval, processes, assembles, or manufactures imported raw materials, parts, components, etc. (in whole or in part) under bonded status, and the finished products are re-exported. Its core feature is 'two ends outside': raw materials are imported under bond, and finished products must be exported for sale. Customs temporarily does not levy tariffs and import linkage taxes on imported materials, but implements strict account book management and verification system. Usage scenarios include processing with supplied materials, processing with imported materials, etc., commonly seen in electronics, textiles, machinery industries. Precautions: enterprises must have processing trade qualification, materials must not be sold domestically without authorization; if sold domestically, taxes must be paid and penalties may be faced; the value-added portion of processing can enjoy tax rebates if exported. Compared with 'general trade', bonded processing can ease enterprise capital pressure; the difference from 'bonded logistics' is that the latter focuses on warehousing and distribution, not involving substantial processing. Unlike 'tax exemption', bonded is deferred taxation, ultimately determined by the flow direction.