China export surge triggers Export VAT Refund extension
The huge recent unexpected growth in Chinese exports has pushed the government into renewing the extension of the Export VAT Refund scheme This regime was already extended in April this year, and has partially stimulated the new growth in exports by enabling Chinese companies to cut costs. To help maintain this much-needed contribution to flagging Chinese GDP growth, the scheme has also been extended to include several new sea ports from September 2014.
The Export VAT Refund scheme enables authorized exporters, with no fines or rulings in the past three years, to reclaim input Chinese VAT or Business Tax on their exports. This ensures that they can recover taxes incurred during the production chain, and therefore reduce their prices in global markets and give themselves a competitive boost.
Key measures of the VAT refund scheme from the Ministry of Finance and State Administration of Tax include:
- Ability to reclaim Chinese input VAT before the goods have left China at all ports included in the scheme
- New ports to include: Suzhou; Wuhu; Jiujiang; Nanjing; Wuhan; Yueyang
- The custom commodity codes, which determine the amount of VAT which may be reclaimed are to be improved to give more credits