Newsletter
NEW RULES FOR TAX REBATES ON EXPORTED GOODS
On 10 July 2004, the PRC State Administration of Taxation promulgated its Circular on Certain Specific Issues Regarding Tax Refunds and Exemptions for Exported Goods. The Circular took effect the same day. It contains specific guidance for regional tax authorities on the scope, content, operational procedures, and methods for the implementation of refunds of and exemptions from taxes and duties on exported goods.
Among the goods for which refunds and ex-emptions are available, the Circular provides a formula for calculating the amount of included tax in the price of exported cigarettes. When a foreign customer delays payment or is unable to pay for exported goods, or an exporting enter-prise is paid by the price difference between the finished products and the imported materials under processing trade, the exporter can apply for a tax refund if it obtains a verification form specifically for export tax refunds issued by an administrative agency for foreign exchange.
With regard to items for which tax refunds and exemptions are not available, the Circular states that items of equipment imported by for-eign-invested enterprises on which taxes are not refundable should be identified by referring to the Catalogue of Imported Goods not Entitled to Tax Exemption for Foreign-Invested Projects. When an exporting enterprise exports non-exempt goods, its output tax should be cal-culated according to one of the formulae set out in the Circular. If non-exempt goods are taxable consumer goods, consumption tax should be calculated and paid in accordance with the rele-vant current taxation policy.
Where an exporting enterprise processes im-ported materials for re-export, the goods it ex-ports will continue to be exempted from tax even if they are categorized as non-exempt.