China’s Customs Voluntary Disclosure System: Penalty Exemptions for Import and Export Enterprises

China’s customs voluntary disclosure system allows import and export enterprises to self-report violations to avoid administrative penalties. This guide explains who qualifies, what violations are covered, and what has changed under the 2025 China customs voluntary disclosure rules.

China’s customs enforcement framework gives import and export enterprises a structured route to self-correct compliance errors before regulators detect them. Under the Customs Voluntary Disclosure System, companies that proactively report tax-related or procedural customs violations to the General Administration of Customs (GAC) can avoid administrative penalties entirely, provided they act within defined timeframes and meet specific eligibility conditions.

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The system, first introduced in 2019, reflects a broader policy direction in China toward tolerance and correction in regulatory enforcement: rewarding proactive compliance over penalizing honest mistakes. For foreign-invested enterprises (FIEs) operating in China, understanding how the system works, who qualifies, what violations are covered, and how to file is a practical element of customs risk management. 

The current rules, set out in the GAC’s Announcement on Handling Voluntary Disclosure of Violations, took effect on October 11, 2025, and are in place until June 30, 2027. The key enhancements introduced in this iteration include extended disclosure periods for tax-related violations, broader eligibility for minor declaration errors under Article 15 of the Customs Administrative Penalties Regulations, and clearer rules around late payment interest relief. 

Who qualifies for penalty reduction or exemption under voluntary disclosure? 

The policy applies to import and export enterprises and entities that voluntarily disclose violations of customs regulations before customs identifies them. Eligibility turns on the type of violation, the time elapsed since the violation occurred, and, in some cases, the financial materiality of the error. 

The table below sets out the full eligibility conditions: 

Additional conditions that apply across the system 

Import and export companies that voluntarily submit a written report to customs regarding their tax-related violations and promptly correct them, and are recognized by customs as voluntary disclosures, can apply to customs for a reduction or exemption of penalties for late tax payments. Customs will then grant the penalty reduction or exemption if the conditions are met.

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It’s important to note that voluntary disclosures that result in a warning or a fine of up to RMB 1 million will not be recorded in the enterprise’s customs credit status. This refers to the National Enterprise Credit Information Publicity System, a platform under China’s corporate social credit system that publicly discloses enterprises’ regulatory compliance records in order to promote transparency and encourage lawful business conduct. Allowing eligible violations to be excluded from publication on this platform helps protect enterprises’ reputations in cases of minor or promptly corrected infractions. 

Meanwhile, for Authorized Economic Operator (AEO) companies that voluntarily disclose customs violations, customs will not suspend the application of relevant administrative measures against the company during the investigation. However, this does not apply to inspection and quarantine violations that involve issues of safety, environmental protection, or public health. 

Import and export companies may benefit from lenient treatment only once for a violation of the same nature in any 12-month period. Repeat disclosures of violations of the same nature or of the same provision of law within the same 12 consecutive months will not be eligible for such lenient treatment. 

For situations involving rights holders granting one or more licenses to the same authorized party for the same goods, any subsequent voluntary disclosure by import and export companies will not be eligible for the lenient treatment. 

How to make a voluntary disclosure

Companies that wish to voluntarily disclose violations to customs must complete the “Voluntary Disclosure Report Form”, which has been released along with the notice. This form must then be submitted along with supporting materials, including account books and documents, to the customs office in the place of the customs declaration, the actual import/export location, or the entity’s place of registration. 

The following information must be provided in the form: 

• Enterprise/entity name
• Unified social credit code
• Customs registration code
• Enterprise credit rating
• Registered address
• Contact person and telephone number
• Type and number of contact person’s ID
• Matters involved in the violation of customs regulations
• Date on which the violation occurred
• Details of the voluntary disclosure (a detailed explanation of the self-inspection findings may be attached separately)
• List of supporting materials

What changed under the 2025 rules 

The 2025 iteration of the Customs Voluntary Disclosure System extends and clarifies the scope of the earlier framework in three main areas.

1. Extended disclosure periods for tax-related violations

One of the most significant changes is the extension of disclosure periods for tax-related violations and for violations affecting the administration of national export tax rebates, from six months to one year. This longer window provides companies with additional time to identify and report issues, helping ensure compliance without fear of automatic penalties.

For cases where a violation impacts export tax rebates, and the potential over-refunded amount is less than 30 percent of the rebate or RMB 1 million, the disclosure period has been further extended to between one and two years. This effectively gives companies that miss the one-year exemption deadline a second opportunity to qualify for penalty relief under certain conditions.

2. Broader leniency for minor declaration errors under Article 15

The policy also introduces greater leniency for violations of Article 15 of the Regulations on the Implementation of Customs Administrative Penalties, which generally concern minor errors such as inaccurate or incomplete declaration of product names, tariff codes, quantities, or other required information. Previously, the policy imposed additional time limitations and financial thresholds based on the statistical impact of the violation, such as: 

1. Disclosure before midnight on the last day of the month in which the violation occurred, with a total statistical impact below RMB 10 million (US$1.4 million); or
2. Disclosure within three calendar months after the end of that month, with a total statistical impact below RMB 5 million (US$700,378).

In practice, these minor declaration errors rarely result in tax shortfalls or regulatory violations that significantly affect customs operations. Moreover, authorities are already able to address these violations adequately under Article 15’s other provisions, which may carry high economic costs and potentially impact a company’s customs credit rating. By providing clear conditions under which voluntary disclosure of such minor errors avoids penalties, the new system reduces compliance costs and streamlines administrative procedures, enabling companies to correct mistakes quickly and efficiently.

3. Clearer rules on late payment interest relief 

The introduction of clearer rules for late payment interest relief offers businesses greater predictability and financial relief. By ensuring that companies that voluntarily disclose tax-related errors can have late fees reduced or waived, the policy eases one of the most tangible cost burdens associated with compliance. This certainty encourages more companies to come forward proactively, fostering a cooperative rather than punitive relationship between customs and traders. It also streamlines dispute resolution, saving both enterprises and customs authorities time and resources.

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Overall, the system recognizes that many minor violations arise from filing or procedural errors rather than intentional misconduct, and it provides a practical framework for businesses to rectify these issues proactively, improving both compliance and operational transparency. 

Practical implications for foreign-invested enterprises in China 

For FIEs engaged in import and export activity in China, the Customs Voluntary Disclosure System has direct practical value in several common scenarios: 

• Classification and valuation errors: Misclassification of goods under the wrong HS code, or undervaluation of imported goods, are among the most frequent customs compliance issues FIEs encounter. Where these arise from genuine errors rather than intentional evasion, voluntary disclosure within the applicable timeframe avoids penalties entirely.
• Processing trade discrepancies: Manufacturing companies operating under processing trade arrangements regularly encounter variances in actual unit consumption vs. declared consumption, particularly where production processes have changed. The 2025 rules include an explicit exemption for processing trade enterprises facing this type of discrepancy.
• Export tax rebate overclaims: Where export rebates have been overclaimed due to documentation errors or classification issues, voluntary disclosure within one year (or within two years for smaller amounts) avoids penalties and protects the company’s rebate eligibility going forward.
• Credit rating protection: For companies whose customs credit rating is commercially significant, affecting inspection frequency, processing priority, and trade partner due diligence, the exclusion of qualifying voluntary disclosures from the public credit record is a material benefit. 

How Dezan Shira & Associates can help 

Dezan Shira & Associates advises FIEs on legal, tax, and customs compliance matters in China, including issues relating to import and export operations. Relevant areas of support include: 

• Reviewing import and export tax and customs compliance positions to identify potential exposure;
• Advising on the tax implications of customs violations and the eligibility conditions for voluntary disclosure;
• Assisting with the calculation and settlement of underpaid taxes and late payment interest arising from customs violations;
• Advising on customs duty and VAT treatment for import and export transactions, including tariff classification and valuation;
• Supporting export tax rebate compliance, including eligibility assessment and documentation requirements; and
• General tax compliance support for foreign-invested enterprises engaged in cross-border trade in China. 

For questions about the tax and customs compliance implications of your company’s import and export operations in China, please get in touch with our professionals or visit our website. 

With the region’s rapid economic growth and diverse regulatory environments, businesses must navigate shifting costs, complex compliance frameworks, and conflicting information. Our professionals support investors with actionable data on Asia’s industrial landscape, location analysis, supply chain diversification, and market entry strategy. We also offer business partner matching services and assist in identifying optimal investment destinations through cross-country competitiveness benchmarking.

Pritesh Samuel

Co-Head of Business Intelligence

Talk to an expert at China@dezshira.com

Or request a consultation at +84 28 3930 2828

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