In order to promote the sustained and stable development of foreign trade and to help exporters alleviate difficulties, ten Chinese Authorities Including the STA have further increased support for export tax rebate policies, including new management measures to promote electronic filing of export tax rebate documents and optimize foreign exchange management.

In this article, we will share the most important and major changes following the announcement released in April 2022 by the State Taxation Administration (STA) relating to “Further Facilitating the Handling of Export Tax Refund to Promote Stable Development of Foreign Trade” (STA Announcement [2022] No. 9).

The announcement introduced 15 measures comprising of three aspects:

1. Increasing the Support of Policies to Help Enterprises

In this aspect, there are three support policies to reduce the burden of export enterprises in order to:

    a) Strengthen the connection between export credit insurance and export tax rebate policies. 

    b) Support the development of processing trade enterprises in allowing to offset the excess VAT input tax transferred out of export products.

    c) Tap into the potential of the departure tax rebate policy and "buy-now-refund" measures to further expand the geographical coverage of the tax rebate policy and facilitate overseas visitors' shopping in China.

2. Enhancing the Convenience of Tax Refund Processing

The announcement proposed seven facilitation initiatives to improve the effectiveness of capital flow:

    a) Strengthen data sharing and management among customs and taxation departments.

    b) Customs, taxation and other departments, shall further simplify the declaration for tax reduction for entrusted exports, leased exports and tax exemption write-off for processing of incoming materials. 

    c) Actively promote the electronic filing of export tax rebate documents such as bills of lading for export goods to improve the efficiency of document collection and disposal. 

    d) Facilitate declaration for export tax rebates so that enterprises can automatically retrieve information on their export declarations and invoices through the tax information system.

    e) Continuously improve the quality and efficiency of export tax rebate processing to within 6 working days in 2022 and fully realize paperless refunds and further improve the efficiency of tax refunds.

    f) Further improve the efficiency of customs clearance for the refund of export goods, and avoid requiring enterprises to submit paper certificates when handling customs clearance of exported goods when the information is already available.

    g) Optimize and simplify the process of handling export tax refund matters and actively promote the realization of paperless export tax rebate certificates for the whole process. 

3. Optimize the Business Environment of Export Enterprises

The following five support measures to promote the stable development of foreign trade are currently being implemented:

    a) Help enterprises improve the efficiency of export business operations and keep export enterprises informed of the progress of customs declaration, customs clearance and tax rebates.

    b) Support the healthy and sustainable innovative development of cross-border e-commerce and facilitate the management of import/export returns and exchanges and encourage to actively apply export tax rebate policies. 

    c) Deepen the implementation of tax rebate management measures for foreign trade integrated service enterprises and encourage enterprises to adopt paperless means to declare and manage export tax rebate documents.

    d) Strengthen information sharing to guide enterprises to operate in good faith and guide export enterprises to timely and proactively correct their breach of trust.

    e) Actively create a fair and just business environment by strengthening collaboration among taxation, public security, customs, the People's Bank of China, foreign exchange and other departments, and crack down on illegal and criminal acts such as false exports and fraudulent export tax refunds.

Summary

For export enterprises, it is vital to maintain and follow the latest rules for export tax refunds, to comply with the regulations and enjoy the benefits of the policy properly. Traders should note the changes in documentation requirements and the relevant penalties for violation.

If you would like to know more about the most recent tax and financial developments in China, as well as applicability and exact details of the support measures, please contact us at info@phcadvisory.com.