Vat Return & Export Vat Tax Refund In China

One of the inevitable benefits for a Trading WFOE/JV or Manufacturing Company in China is export tax refunding. On one hand, the establishment can bring considerable tax refunds back to the enterprise to improve competitiveness even ease financial pressure; On the other hand, it also helps enterprise to keep an excellent corporate reputation.

Export Tax Refund or VAT Return refers to the value-added tax and consumption tax paid by the exported goods to the actual production and circulation segment in china. The system of VAT tax refund for export goods is an important part of the tax revenue of a country.

The export tax rebate is mainly through the refund of export goods of domestic tax paid to balance the tax burden of domestic products, making their products to exclude tax costs to enter the international market to enhance competitiveness.

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Overview of China VAT Refund

China, known as "the world factory", is a lucrative spot for exporting business. One of the inevitable benefits for a Trading WFOE/JV or Manufacturing Company in China is export tax refunding. On one hand, the establishment can bring considerable tax refunds back to the enterprise to improve competitiveness even ease financial pressure; On the other hand, it also helps enterprise to keep an excellent corporate reputation.
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What's VAT (Export Tax) Refund?

Export tax refund refers to the value-added tax and consumption tax paid by the exported goods to the actual production and circulation segment in china. The system of tax refund for export goods is an important part of the tax revenue of a country. The export tax rebate is mainly through the refund of export goods of domestic tax paid to balance the tax burden of domestic products, making their products to exclude tax costs to enter the international market to enhance competitiveness.

China VAT Rates 2017

China VAT rate has been changed from four tiers to three tiers in 2017, in other words, 13% tax rate has been removed from the tax rate of 17%, 13%, 11% and 6%.

The most immediate effect of the simplified reform on China VAT Rates is to lower taxes for taxpayers. Preliminary estimates show that the reform will benefit 25,000 taxpayers in Guangzhou mainly in the wholesale and retail business field.

The changes in China VAT Rates not only benefits the enterprises by reducing tax burden but also effectively enhance the enterprise's ability to further expand reproduction by liquidizing the cash flow.

China VAT Refund Service

China VAT Refund Process

• The applicant must be an enterprise with the right to self-export and self-VAT refund, which refers to enterprises approved by the relevant departments and owns the right to import and export.
• Enterprises mainly refers to the foreign trade companies and manufacturing enterprises, including Foreign-Invested Enterprises(FIEs).
• Enterprises must hold the legal business license, which is the proof that enterprise or organization has the legal rights to operate business inside China.
• Enterprises must have independent accounting with a separate business bank account to handle the purchase and sale of foreign business and payment.
• Export goods enjoys VAT refund. Since 2015, the VAT rebate rate has 3 categories. It is 17%, 11%, and 6% respectively. The tax refund rate of consumption tax shall be implemented according to the legal rate of taxation.
• Legal valid VAT special invoice issued by supplier.
• Foreign currency received which amount consistent with export custom declared.
• Enterprises that do not have the above-mentioned conditions shall not apply for the VAT Return.

Service Process of VAT Refund

• Foreign currency account of import and export company receives payment of foreign exchange;
• Payment to the supplier after the bank settlement;
• Obtain VAT special invoices from suppliers after remittance;
• Goods (commodity inspection) Export Declaration;
• Collect documents used in each process of export and make pre-declaration;
• After the pre-declaration is approved, the tax refund will be obtained.

Document Checklist for VAT Refund

1. Customs Declaration Form. 

Customs declaration forms shall be filed by the import and export enterprises when the goods are imported or exported to the customs for inspection and verification of the documents.

2. Export Invoice. 

Export invoice is the document issued by an export enterprise based on the sales contract signed with the export buyer. It is the main certificate of foreign purchase, and also the basis for the accounting department of export enterprises to enumerate the sales revenue of export products.

3. Purchase Invoice. 

The purchase invoice states the suppliers' name, products' name, units of measurement and quantity of the export products. 

4. Remittance Slip or receipt of settlement of foreign exchange.

5. Products belonging to the production enterprises directly export or entrust the export of homemade products, which shall be settled on CIF basis and should accompanied by export cargo waybills and export insurance policies.

6. The Verification of Export Proceeds

7. Other materials relating to export rebates.

Facts

• Our tax refund team will control the refund process and inform you the updated tax refund information. A minimum of 2 financial personnels' salaries will be saved.
• There is no delay in foreign exchange settlement, and the account is operated by the enterprise and can be paid at any time.
• Our VAT Refund services lower startups' management cost.