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    Take advantage of the VAT refund

    Take advantage of the VAT refund

    In China, in order to more actively develop and stimulate the export of goods, a value-added refund (VAT) has been introduced, which is in demand among both Chinese and foreign companies with an export license. If the license of the company includes the right to export and import products, then after the completion of the transaction, the company can apply to the tax authorities of China and issue a VAT refund. The return of tax on export is considered a preferred factor of government taxation in China, in relation to foreign firms, on the basis of which, after the export of goods from the country, the tax authorities return to the company the amount of indirect taxes such as VAT and excise, removed from the production and sale of products for territory of China.

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    Of course, the main nuance for processing a VAT refund is its initial payment. It is worth knowing that many companies that conduct foreign economic transactions have the right to a tax refund. But often, not all of them can complete the transaction on time and correctly. Also in China, a “cumulative” VAT model has been introduced, when the accrued tax refund for a year is paid to the company 12 months after the start of the export.

    Today, the interest tax rate in China is 17% for industrial products and 10% for agricultural products, but the rate may vary depending on the product category. In July 2007, an order was introduced on the rates of VAT refund, after which the rates of refund of value added tax on various products (about 2,000 goods) were reduced to a minimum or completely abolished. As a rule, they are classified as energy-intensive products and include: steel metal products, fiberglass products and other products. This order is aimed at increasing the production of goods for the domestic market and the desire of the Celestial Empire to push Chinese businessmen to export products with high added value.

    How to apply for a VAT refund?

    For a value added tax refund in China, the supplier must meet certain requirements of the established regulations, including:

    1. Production must be registered on the territory of mainland China.
    2. The company must work with value added tax, that is, according to the requirements of the general taxation procedure. You can check this nuance by asking the supplier for a certificate for doing business.
    3. Availability of an export license.
    4. Be registered with the Chinese customs authority.
    5. Have foreign exchange income from abroad, which confirms the foreign economic transaction.
    6. Have an invoice and customs declaration that confirm the purchase of goods in China and that the product was then sold abroad.

    The list of basic documents for a value added tax refund includes a customs declaration and an invoice, which are submitted to the tax authority. There they are checked for authenticity, based on the results of which a decision is made on the refund of the tax collection. The return period is 3-6 months from the date of export of the goods.

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