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For what reasons do special bonded zones exist around China? What are the Bounded Zone and the Export Processing Zone?

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Since China has opened up to foreign investments special bounded zones have been set up around the country to attract more foreign investors. Basically, these zones are treated as non-Chinese customs areas; therefore trade in and out of the zones are treated as import and export. Each side has obligations to pay and receive VAT duties and rebate. In the Bounded Zone, Chinese suppliers have to wait for the company to ship the goods overseas in order to receive the refund.  In the Export Processing Zone the Chinese suppliers receive immediate Export VAT rebate when they have sold the goods to the company in the Export Processing Zone. Both of the Zones have no import VAT or customs duties on import and Chinese customers have to pay import VAT and customs duties.



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