2nd July 2007 July 2007 - Issues 1
The
Ministry of Finance and State Administration of Taxation jointly issued
Cai Shui [2007] No.90 ("Circular 90") on 18 June 2007, which
brings significant changes to China's export VAT refund rates. The
underlying reason is that China is facing increasing pressure from trading
partners to reduce its trade surplus.
Additionally, China is becoming increasingly concerned about
resources preservation and environmental protection, which is reflected in
the export refund rate adjustments as indicated in Circular 90.
Circular 90 involves 2,831 types of commodities, which account for around
37% of the commodities as indicted in the customs tariff code. The
commodities involved could be classified into three categories:
A.
A Cancellation of export refund mainly for:
-
--
Base metals, minerals and their products
-
--
Animal
and vegetable products
-
--
Some chemical products
-
--
Leather
- -- Wood and wooden products
B.
B Reduction of the export refund rate mainly for:
-
--
Vegetable oil
-
--
Some chemical products
-
--
Plastic, rubber and their products
-
--
Suit cases and bags
-
--
Some leather products
-
--
Paper products
-
--
Garment, hats and shoes, umbrellas
-
--
Ceramic, glass products, jewelries and precious metal products
-
--
Electrical and mechanic appliances
- -- Furniture, watch and clock, toys
C.
C
Export VAT exemption mainly for:
-
--
Peanuts
-
--
Paintings
- -- Stamps
The
commodities are mainly high-energy consuming and polluting, low value
adding, or were frequently involved in the recent anti-dumping cases. The
adjusted export VAT refund rates will come into effect on 1 July 2007.
Exporters of the commodities specified in Circular 90 should carefully
reassess the VAT implications and the costs of the commodities.
Generally, for commodities classified under Category A, the
exporters will not be able to claim back any input VAT, or the export
might be deemed as domestic sales hence output VAT applies; for
commodities classified under Category B, the exporters would have to
absorb the reduced export refund as their cost; while for commodities
classified under Category C, the corresponding input VAT could not be
claimed back as well.
"Zeng Zhi Shui"
(Value Added
Tax)
"Ying Ye Shui"
(Business Tax)
