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From Short-Term Benefit to Long-Term Value: Encouraging a Sustainable Approach to China Sourcing. 8-page report by Deloitte.

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back to index backCHINAtalk June,  2005


SAT issues guidance on Export Tax Exemption (refund) procedures

The State Administration of Taxation (SAT) issued a Notice (Guoshuifa [2005] No. 68 on 19 April 2005 providing guidance on the procedure governing export tax refunds.

The Notice specifies that, in the case of products exported by trade enterprises, if the enterprise fails to apply for an export tax refund within 90 days after the export date specified on the export customs declaration form (for export tax refunds only), the enterprise must accrue output VAT and file VAT return with the tax authorities accordingly. The only exception to this rule is if the enterprise has obtained the approval of the tax authorities (at a level higher than the municipal or regional level) to request a refund after the 90 days if there are other regulations or if there are special reasons for the failure to file. If the products are also subject to consumption tax, the enterprise should file the consumption tax return accordingly.

Trade enterprises should accrue output VAT or calculate tax payable according to the following formulas:

1. For general VAT payers:

Output VAT = (export FOB × exchange rate) ÷ (1 + VAT rate) × VAT rate

2. For small-scale VAT payers:

VAT payable = (export FOB × exchange rate) ÷ (1 + VAT rate) × VAT rate

If an export enterprise fails to timely apply for an export tax refund for products exported through processing-on-purchased-imported-material trade, the enterprise must accrue output VAT or calculate its VAT payable based on the difference between the FOB price of the exported products and the imported material used for production.

Where an export enterprise applies for an extension of time to apply for an export tax exemption (refund), the tax authorities must process the application according to Article 3 of Guoshuifa [2004] No. 64 and Article 1 of Guoshuifa [2004] No. 113. If the export enterprise has a reasonable justification for requesting the extension and the request is approved by the tax authorities at or higher than the municipal or regional authority level, the enterprise may file for the refund according to the approved extended time limit. The Notice takes effect 1 May 2005.


Source: Deloitte China - GAI


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