The VAT Return or Export Tax Refund is a critical trade policy tool that helps improve the nation’s exports.
Essentially, this means that a refund will be provided for value-added tax and consumption tax already paid on exported goods during their production and sales in the country.
If you’re looking into conducting business activities within the Chinese market, then it’s important to be well-informed on China’s Export Tax Refund policy.
What is the Policy About?
This policy was initially implemented in the hopes of encouraging the export of domestically produced goods.
However, presently, this has become a pillar of the Chinese economy. It allows the Chinese economy
to move from a labor-intensive one to one that is more focused on the tertiary sector.
Application of this Policy
The way this policy is put into effect is as such: the value-added taxes which can be refunded are commodity turnover
. A rebate application may only be filed once the goods have exited the Chinese port.
A rebate application helps you obtain a partial refund on export products
, domestic production, and circulation in the actual payment of the product tax.
How Much Will You Be Reimbursed?
In China, the tax rebate rate differs from industry to industry. This can range anywhere from 0% to a full 17% (the equivalent of the entire Chinese VAT). This is a rough estimate of the range since rates fluctuate depending on the level of government intervention.
This practice is denounced by the World Trade organization
since it is discriminatory towards companies belonging to certain industries.
Tax Rebates and Exemption Declaration procedures
A company can apply for a rebate
after it carries out export procedures and records the sales in its financial statements. It can apply to the tax bureau for VAT payments and exemptions.
While applying for VAT payment, the company should present the following documentation:
Declaration of VAT payment form, the declaration form of VAT exemption as well as the refund for production enterprise that is issued by the local tax authority;
An export invoice;
Import and export declaration form;
Cancellation and verification for the State Administration for Foreign Exchange;
The tax authority may ask for additional documentation.
This entire process takes about two months.
If you’re looking for more information on China’s Tax Refund Policy, ask Business China
In addition to providing information VAT returns, we guide our clients on how to set up Joint Ventures
and China Shelf Companies
among other entities.
To avail of our services, call us at +86-020-2917 9715.