(Summary)
The Notice of the State Administration of Foreign Exchange on Issues Related to Making Further Adjustments to the Policies for Administration of Current Account Foreign Exchange Accounts was issued on September 9, 2002 and came into force on October 15, 2002.
The Notice and the Detailed Implementing Rules for Administration of the Current Account Foreign Exchange Accounts of Domestic Organizations introduce a unified legal regime for the current account foreign exchange accounts of both wholly Chinese-owned enterprises and foreign-invested enterprises. Of particular note are the unified rules for the caps on current account foreign exchange accounts, which replace the cap rules that previously applied to foreign-invested enterprises. The Notice and the Implementing Rules also provide for the consolidation of current account foreign exchange settlement accounts and special-purpose foreign exchange accounts.
In principle, the cap on the current account foreign exchange account of a "domestic organization" (this term includes foreign-invested enterprises) is to be 20% of the domestic organization's current account foreign exchange receipts in the previous year. When a domestic organization that had no current account foreign exchange receipts in the previous year opens a current account foreign exchange account, the initial cap should not, in principle, exceed an amount equivalent to US$ 100,000.
Current account foreign exchange settlement accounts and special-purpose foreign exchange accounts opened before the Notice comes into force may continue to be used in accordance with their original cap and scope of permitted payments and receipts. However, domestic organizations must carry out the procedures with the local Foreign Exchange Authorities for combining foreign exchange accounts and having their cap re-approved before December 31, 2003.
This translation, together with any explanatory material, is provided courtesy of Lehman Tax & Accounting.
