What is foreign exchange write-off
Renminbi cannot be freely circulated and exchanged. It is this monetary policy that not only saves a lot of things, but also brings some inconvenience to enterprises engaged in import and export business. Save trouble, most of the business is done in dollars, and you hardly need to consider what risks the change of the exchange rate of dollars will bring to your business. The trouble is that you can't just take some dollars out of your pocket every time, especially when you need to import a lot of trade. I can't help it if I want to launder money. In short, this monetary policy is mixed.
However, the country still needs great efforts to really implement this monetary policy. The exchange rate is stable and easy to handle, and the state treasury has a large amount of foreign exchange reserves. There are more enterprises that need foreign exchange, and the dollar is bullish, so the central bank will exchange some dollars from foreign exchange reserves. When the foreign exchange in the foreign trade market is overcharged and the US dollar is bearish, the central bank will release some RMB and recover some US dollars. Since the RMB is not allowed to circulate and exchange freely, there is no need to use much foreign exchange reserves to firmly peg to the US dollar. Moreover, the state treasury has trillions of foreign exchange reserves, enough for two or three Gulf wars.
However, it is not easy to control the free circulation and convertibility of RMB. It is easy to handle RMB cash, and the customs is not allowed to bring a large amount of RMB out of the country, nor is it allowed to bring a large amount of foreign exchange cash into the country. At most, it is impossible to smuggle some RMB and foreign currency, or secretly exchange foreign exchange at the bank gate. However, it will be troublesome to control the huge capital flow between international trade enterprises. Think about it. Hundreds of thousands of foreign trade enterprises in China have millions of bank accounts, and tens or billions of dollars of funds enter and leave Chinese mainland every day. How to manage this?
Don't worry, the China government has a special agency to manage this matter, and that is the State Administration of Foreign Exchange. It is a legal institution specializing in the management of import and export foreign exchange, and every foreign trade enterprise has to deal with it. Of course, SAFE alone can't control the circulation and exchange of foreign exchange, but also involves banks, customs and tax bureaus to do business.
To this end, the SAFE has designed a special management system to monitor the import and export of each foreign exchange in each trade. This system is called export write-off system and import write-off system, which are collectively called foreign exchange write-off system. Foreign trade enterprises must follow this system, otherwise the bank will not settle or pay foreign exchange for you, the customs will detain your goods, and the tax bureau will not give you a tax refund.
Therefore, with this foreign exchange verification system, there will be a verification form for export receipt and a verification form for import payment, which are collectively called verification forms. The verification form is actually a tracking form, and each verification form has a unique number to track the import and export business.
Every verification form applied by a foreign trade enterprise to the State Administration of Foreign Exchange is filed and kept in the database of the State Administration of Foreign Exchange. The verification form follows the foreign trade business all the way through the customs, banks and tax bureaus, and is stamped with various seals or torn open. However, the final stub must be returned to SAFE to check the original database electronic files and cancel the verification form number. This process is called "write-off", which means that your transactions are legal in foreign exchange receipts and payments and are allowed to be written off.