Tax Guidance

Export Tax Rebates In China


Export Tax Rebates In China

China Export Rebates – The basic system refers to the refund of the value-added tax and consumption tax that actually paid on the domestic production and circulation of exported goods.

The export tax rebate system for China mainly balances the tax burden on domestic products by refunding domestic taxes paid on exported goods, allowing domestic products to enter the international market at a cost excluding tax, and competing with foreign products under the same conditions to enhance competitiveness.

The expansion of foreign exchange is a preferential system to encourage the enterprise which established in China.

I.The procedure of China Export Tax Rebates

  • Regardless of whether it is in Shanghai, Shenzhen, Xiamen, Hangzhou, Suzhou, Kunshan, or Guangzhou in mainland China, companies are required to pay value-added tax (“VAT”) on goods purchased locally in China.
  • If these goods are subsequently exported, the exporter can apply for a refund of the VAT paid. The export VAT refund rate varies depending on the type of export goods, and can be fully refunded, partially refunded, or even not refunded.
  • The basic system of the mainland’s export tax refund system refers to the refund of the value-added tax actually paid in the domestic production and circulation of export goods, and balances the tax burden of domestic products by refunding the domestic tax paid on export goods, so that Chinese products can be tax-free.
  • Costs enter the international market and compete with foreign products under the same conditions, thereby enhancing competitiveness and expanding foreign exchange earnings from exports. Therefore, it is a preferential system to encourage enterprises registered in China to export.

II.The procedure of China Export Tax Rebates

Apply For The Tax Refund Enrollment

China export enterprises need to prepare business licenses, customs registration certificates and related export documents, including export declarations, shipping invoices, purchase invoices, foreign exchange receipt notices, taxation certificates for goods export, and other certificates related to export business, etc. ) Apply for a tax refund registration certificate to the local authority within 30 days from the date of approval.

Competent authority audit

For the documents submitted by Chinese enterprises, the competent authority will verify the export business in accordance with written information. If the competent authority passes the examination and approval, the export business could enjoy the tax rebate preference; if it fails, in accordance with the requirements of competent authority to submit additional documents or it will withdraw to export tax refund business.

Export Tax Rebates

Enterprises approved by the competent authority which handle export tax rebate business will enjoy the tax refund of the export goods, reducing the corporate tax burden.

III.Basic documents for export tax rebate application

IV.Mainland China export tax rebate rate

  • The export VAT refund rate for mainland enterprises that want to apply for tax refund on export goods is determined by the customs commodity code. The export VAT refund rate ranges from 0% to 13%. In the case of a tax rebate rate of 13%, the input VAT can be fully recovered. (From April 1, 2019, the current 16% value-added tax rate for manufacturing and other goods will be reduced to 13%, the current 10% tax rate for transportation, construction and other industries will be reduced to 9%, and the 6% value-added tax rate will remain unchanged. Changes.) The limit on the input tax, that is, the non-recoverable input tax is determined by a variety of factors, but it is mainly based on the VAT rebate rate of export products and whether the company is a trading company or a production factory.
  • The calculation of export VAT refund is a complex issue, when Chinese exporters incur VAT on costs (raw materials, overhead, machinery), they usually pay a VAT of 13% of the cost. If the VAT refund rate for exported goods is lower than 13%, such as 8%, the exporter will pay 5% more, and these costs may be reflected in the manufacturer’s selling price of the exported goods (FOB price) or trade. the purchase price of the company’s export goods.

V.Notice Of Export Rebates

Chinese enterprises that want to apply for export tax rebates should pay attention to the principle of applying for tax rebates for the month when the goods are exported in order to avoid the failure of enjoy tax benefits beyond the period of tax rebates and increase the corporate tax burden. 

All the export information of the enterprise should be properly kept whatever the bank, customs, shipping invoices, etc. if you cannot provide complete tax refund application information, it will affect the export tax refund audit.

VI.Export tax rebate application and coordination

When submitting export VAT refunds, various export documents, such as export declarations and foreign exchange information, will be required. Since export information is collected from different departments and needs to be provided within a specific time frame, especially when it comes to third-party export agents.

Any errors or incorrect information in the export VAT refund application may result in the rejection of the tax refund, resulting in the export item being regarded as a local domestic sale and subject to VAT.

Based on the accounting agency service, InterArea conducts accounting agency for customers on a monthly basis and can check whether customers are eligible for tax deduction (export tax rebate), reducing unnecessary tax expenses for customers and reducing the time and cost of customers Go to prepare the documents required to apply for export tax rebate.

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