Circular on Value-Added Tax and Consumption Tax Policies on Exported Goods and Services
Circular on Value-Added Tax and Consumption Tax Policies on Exported Goods and Services
Circular on Value-Added Tax and Consumption Tax Policies on Exported Goods and Services
Cai Shui [2012] No.39
May 25, 2012
Finance departments (bureaus) and offices of the State Administration of Taxation of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan, and the finance bureau of Xinjiang Production and Construction Corps,
For the purposes of making it easier for tax authorities and taxpayers to understand and implement the export taxation policies systemically and accurately, the Ministry of Finance and State Administration of Taxation has sorted out and classified the VAT policies and consumption tax policies on exported goods and foreign-oriented processing, repair and fitting services (hereafter referred to as the "exported goods and services", including the "goods deemed as exported goods") which were enacted successively in the recent years, and clarified the several problems reflected in the actual implementation. Relevant issues are hereby notified as follows,
I. Exported goods and services eligible for VAT refund (exemption) policies.
For the following exported goods and services, besides the provisions in Article 6 and Article 7 of this Circular, the policies concerning the exemption and refund of Value-added Tax (hereafter referred to as the "VAT refund (exemption)") shall be applied.
1. Goods exported by export enterprises
For the purpose of this Circular, "export enterprises" means the units or individually owned business that have gone through the formalities for industrial and commercial registration, taxation registration and foreign trade operator archival-filing registration as required by the law, which export goods on a self-operated basis or a commission basis; and the manufacturing enterprises that have gone through the procedure for industrial and commercial registration and taxation registration according to the law but have not gone through the formalities for foreign trade operator archival-filing registration, which export goods through agents.
For the purpose of this Circular, "exported goods" means the goods which have actually left the Chinese territory after being declared to the Customs, including self-exported goods and goods exported through an agent.
For the purpose of this Circular, "manufacturing enterprises" means the units or individually owned business which is equipped with manufacturing ability (including processing, repair and fitting ability).
2. Goods of export enterprises or other units deemed as exported goods, specifically refers to
(1) Goods exported by export enterprises for foreign aid, foreign contract or overseas investment.
(2) Goods which, after having been declared to the Customs by export enterprises, enter the export processing areas, bonded logistics parks, bonded port areas, comprehensive bonded areas, Zhuhai/Macao Cross-Border Industrial Zone (Zhuhai Park), China and Kazakhstan Horgos International Border Cooperation Center (Chinese overall zone) and bonded logistics centers (type B) as approved by the State (hereafter referred to as the "Special Areas" uniformly) , and are sold to the units within the Special Areas or overseas units and individuals.
(3) Goods sold by the enterprises engaging in the business of tax-free commodities [excluding the goods which are prohibited from being traded or restricted from being exported by the State (see Appendix I), cigarettes and goods exceeding the operation scope as provided in the Business License for Enterprise Legal Person of the enterprises engaging in the business of tax-free commodities]. The aforesaid goods specifically refer to, A. Goods which are declared to the Customs by the China Duty Free Group and transported to the customs supervision warehouses, intended for the sale at its duty-free shops which are established upon the approval of the State and carry out uniform operation, uniform organization of goods purchasing, uniform formulation of retail price and uniform management; B. Goods which are declared to the Customs and transported to the customs supervision warehouses by the enterprise engaging in the business of duty-free commodities as approved by the State excluding the China Duty Free Group, intended for sale at its duty-free shops within the customs area at its Capital Airport or Port; C. Goods intended for the sale at the duty-free shops within the customs area at Shanghai Hongqiao Airport and Pudong Airport of the enterprise engaging in the business of duty-free commodities as approved by the State excluding the China Duty Free Group.
(4) Sale of mechanical and electrical products through successful bids (hereafter referred to as the "bid winning machinery and electronic products") by export enterprises or other units to international financial organizations or foreign governments for the loans for the international bidding construction projects. The abovementioned bid winning machinery and electronic products include the machinery and electronic products which are sub-contracted to export enterprises or other units by foreign successful bidders. See Appendix II for the specific scope of the loan institutions and the bid winning machinery and electronic products.
(5) The self-produced offshore structures sold by the manufacturing enterprises to the marine oil and gas mining enterprises. See Appendix III for the specific scope of the constructions of offshore structures and the marine oil and gas mining enterprises.
(6) Goods which are sold by export enterprises or other units to international transport enterprises used for international transport vehicles. The aforesaid provisions shall temporarily be applied to the goods which are sold by foreign ships supply companies and ocean shipping supply companies to foreign ships and Chinese ocean ships, and the aviation foods which are produced and sold to international flights of domestic and foreign aviation companies by domestic aviation supply companies.
(7) Water (including water vapor), electricity and gas (hereafter referred to as the "water, electricity and gas supplied to the special areas") which are sold to the manufacturing enterprises within the special areas for production by export enterprises or other units, and without declaration to the Customs.
Except as otherwise provided by this Circular, the Ministry of Finance or the State Administration of Taxation, the goods deemed as the exported goods shall apply the various kinds of provisions of the exported goods.
3. Foreign processing, repair and fitting services provided by export enterprises.
"Foreign processing, repair and fitting services" means the processing, repair and fitting provided to the imported and re-exported goods or transport vehicles engaging in international transport.
II. Measures for VAT refund (exemption).
Exported goods and services eligible for VAT refund (exemption) policies shall apply the measures for VAT exemption, offset and refund or the measures for VAT exemption and refund.
1. Measures for tax exemption, offset, and refund. When the manufacturing enterprise is exporting self-produced goods and the goods deemed as self-produced goods (see Appendix IV for the specific scope of the goods deemed as self-produced goods) and providing foreign processing, repair and fitting services and when the specific manufacturing enterprise (see Appendix V for the specific scope) is exporting goods which are not produced by it, VAT shall be exempted, the corresponding input tax amount shall be deducted from the payable VAT (excluding payable VAT applying the policy of levy and refund, and refund after collection), and the portion remaining after the deduction shall be refunded.
2. Measures for tax exemption and refund. When the export enterprises without production capability (hereafter referred to as the "foreign trade enterprises") or other units are exporting goods or services, VAT shall be exempted, and the corresponding tax proceeds shall be refunded.
III. Export VAT refund rate.
1. Except for the export VAT refund rate (hereafter referred to as the "tax refund rate") otherwise provided for by the Ministry of Finance and the State Administration of Taxation according to the decision of the State Council, the tax refund rate for exported goods shall be the applicable tax rate. The State Administration of Taxation shall promulgate the tax refund rate through the Tax Refund Rate Catalogue of Exported Goods and Services according to the aforesaid provisions for the implementation of the tax authorities and taxpayers. In the event of adjustment to the tax refund rate, the implementing time shall be subject to the export time as indicated in the Customs Declaration of Goods for Export (specifically for export tax refund) (including the goods under process, repair and fitting) except as otherwise provided.
2. Special provisions on the tax refund rate.
(1) When the foreign trade enterprises purchase exported goods where the tax is collected through simplified collection methods and the purchase of exported goods from the small-scale taxpayers, the tax refund rates shall be based respectively the collection rate actually implemented in the simplified collection methods and the collection rate of small-scale taxpayers. Where the abovementioned exported goods have obtained special VAT invoices, the tax refund rate shall be determined based on the lower rate between the two.
(2) For the goods under process, repair and fitting by an agent of the export enterprises, the tax refund rate of the processing, repair and fitting expenses shall be the tax refund rate of the exported goods.
(3) For the bid winning machinery and electronic products, certain raw materials which are declared to the Customs by the export enterprises to be sold to the manufacturing enterprises within the special areas for production (hereafter referred to as the "specific raw materials", see Appendix VI for the specific scope), and the water, electricity and gas supplied to the special areas, the tax refund rate shall be the applicable tax rate.
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