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With a view to solving the problems reflected by each region concerning the enforcement of export tax refund policies, we hereby make the following notice after deliberation: I. The following formula shall be applied for calculating and deducting the output tax payable on the taxable goods regarded as sold in domestic market according to the Measures for Tax Exemption, Deduction or Refund: Output tax payable = Offshore price of export goods regarded as taxable goods sold in domestic market ¡ÁForeign exchange quotation of Renminbi x VAT rate In case the export enterprises have made calculation on the amount of taxes prohibited from being exempted or deducted in the tax exemption, deduction or refund prescribed on the above-mentioned taxable goods, which are regarded as goods sold in domestic market and have been changed into cost, they shall be changed from the cost item into the income item of amount of tax. The taxable goods regarded as goods sold in domestic market shall include: Goods for which the relevant certificates of tax refund or exemption on their export haven't been fully collected by the production enterprises within 6 months from the date of applying to customs for export or for which the formalities of tax exemption, deduction, or refund haven't been handled at the tax authorities in charge prescribed in the "Circular of the Ministry of Finance and the State Administration of Taxation on Further Advancing the Implementation of Measures for Tax Exemption, Deduction and Refund on Export Goods" (No. 7 [2002] of the Ministry of Finance and the State Administration of Taxation); and the export goods enjoying the tax exemption, deduction, or refund and with no electronic data (excluding the paper-made customs declaration) declared by the production enterprises, or the export goods with electronic data but haven't been declared at the current month by the enterprises prescribed in the "Circular of the State Administration of Taxation on Examination and Verification of the Export Volume of the Production Enterprises Enjoying Tax Exemption, Deduction or Refund by Using the Export Data in the "Port Electronic Law Enforcement System" (No. 95 [2003] of the State Administration of Taxation). The export volumes, for which taxes unpaid shall be paid in the following month prescribed in Document No. 95 [2003] of the State Council, shall not include the export volume of the business of commission, agency factor, or consignment. The amount of taxes prohibited from exemption or deduction in the tax exemption, deduction or refund, shall be calculated in light of the formula prescribed in Document No. 7 [2002] of the Ministry of Finance and the State Administration of Taxation. II. According to Article 2 of Document No. 95 [2003] of the State Administration of Taxation, a production enterprise shall, after having fully collected the certificates of tax refund or exemption, apply to the department in charge of tax refund for going through the formalities for tax exemption, deduction or refund on export goods, which are deemed by the enterprise as goods sold in domestic market and for which taxes have been paid, within the prescribed period for reckoning export tax refund. In case the sales volume of export goods of an enterprise accounts for a much higher proportion in its total sales volume, and as a result the enterprise is unable to deduct the paid taxes, the taxes shall be refunded by the prescribed rate of export tax refund within the prescribed reckoning period upon the approval of the administrations of state taxation at the level of provinces (autonomous regions, and municipalities directly under the Central Government). III. Where a production-oriented enterprise group corporation (or parent plant) exports goods for its member enterprises (or branches) as an agent, the enterprise group (or parent plant) may apply to the tax authorities in charge for issuance of the "Certificate of Export as an Agent", and the member enterprises (or branches) shall implement the methods of tax "Exemption, Deduction, or Refund". IV. Where a foreign contracting engineering company, who has the management right for foreign economic cooperation upon approval by the relevant departments, and who is not an ordinary VAT taxpayer, purchases export goods with respect to a foreign contracting project, the production enterprises supplying goods for it may apply to the tax authorities for issuance of Tax Payment Notice (used specially for export goods) upon the strength of the certificates (copies) such as the certificate of approval for the management right of foreign economic cooperation, etc., provided by the foreign contracting engineering company. The foreign contracting engineering company may then, upon the strength of the Tax Payment Notice (used specially for export goods), common invoices or special VAT invoices, and other prescribed certificates, apply for handling tax refund on export goods with respect to the foreign contracting project to the tax authorities in charge. V. Where a production enterprise within the bonded zones purchases raw materials, components and parts, etc. from the enterprises outside the bonded areas, who have the management right of import and export, and exports them after having processed them into products, it shall apply to the tax authorities in charge for handling tax exemption, deduction or refund upon the strength of the file bill on exit issued by the customs in the bonded zones and other prescribed certificates. Where an enterprise engaging in the processing of the imported materials in the bonded zones imports raw materials and components and parts from abroad, it may, upon the strength of the "Bill for Filing the Imported Goods in the Customs Bonded Zones", go through the formalities for obtaining the "Certificates of Tax Exemption on Trade of Processing Imported Materials by Production Enterprises", etc.. VI. Tax refund or exemption on goods exported through storehouse, which is supervised by the customs, shall be handled according to the existing provisions upon the strength of the customs declaration for export goods (used specially for export tax refund) signed and issued by the customs or other prescribed certificates. VII. As to the provisions of Article 3 of the Document No. 7 [2002] of the Ministry of Finance and the State Administration of Taxation, namely, "the purchase of raw materials enjoying tax exemption shall include the purchase of raw materials enjoying tax exemption from within the country and the import of materials and components and parts enjoying tax exemption for processing the imported material", the purchase of raw materials enjoying tax exemption from within the country refers to the goods enjoying tax exemption, whose names are listed in the "Interim Regulations of the People's Republic of China on Value-Added Taxes" and the "Detailed Ruled for the Implementation of the Interim Regulations of the People's Republic of China on Value-Added Taxes", and other relevant provisions, and for which the input tax payable cannot be calculated and deducted prescribed. VIII. If an enterprise is doing a new export business other than those prescribed in paragraph 2, and paragraph 3 of the present Article, the method of refunding taxes on monthly basis shall not be applied to the amount of tax refundable occurred within 12 months from the date of occurrence of the first of the export business. That amount of tax refundable shall be carried forward to the next term to offset for goods sold in domestic market. After the 12 months, the provisions of Article 9 of the present Circular on small export enterprises shall be applied, if it is a small export enterprise. If the enterprises do not fall within the scope of small export enterprises, the tax exemption, deduction or refund thereof shall be handled uniformly by way of calculation on monthly basis. Where an enterprise has registered and opened business for over one year (excluding small export enterprises) and does have the production capability and has no illegal acts such as tax evasion, smuggling, or evading or illegally trading in foreign exchange upon verification by local or municipal tax authorities, the tax exemption, deduction or refund of its newly occurred business may be calculated on monthly basis uniformly. Where a newly established enterprise whose total sales volume of internal distribution is 5 million Yuan or more, and whose overseas sales volume accounts for 50% or more of its total sales volume, and it will face difficulty if its tax refund is not to be handled within 12 months from the date of establishment, the tax exemption, deduction or refund thereof shall be handled by way of calculation on monthly basis uniformly on the basis of tight control upon the approval of the administrations of state taxation of provinces, autonomous regions, and municipalities directly under the Central Government. IX. The amount of tax refundable of a small export enterprise, which is occurred in the middle of the year, and on which the term for examination and verification of the tax refund is 12 months under Article 8 of Document No. 7 [2002] of the Ministry of Finance and the State Administration of Taxation, shall not be handled by way of refunding taxes on monthly basis, but shall be handled by way of carrying it forward to the next term to offset for goods sold in domestic markets. For the part failing to be offset, the tax refund shall be handled once for all at the end of the year. The standard for determining the small export enterprises shall be made uniformly by the administrations of state taxation of all provinces (autonomous regions, and municipalities directly under the Central Government) according to the reality of the whole provinces (autonomous regions, and municipalities directly under the Central Government), and within the range of 2 million Yuan or more up to 5 million Yuan of the total sales volume of the enterprise in domestic markets and overseas markets in the previous taxpaying year. X. The VAT shall be exempted for the export goods of the production enterprises taxed by simple method. And other goods exported shall apply the Methods of Tax Exemption, Deduction and Refund. XI. Where a small-scale taxpayer entrusts other processing enterprises to undertake the business of processing with materials provided, it may apply to the tax authorities for issuance of "Certificate of Tax Exemption on Processing with Materials Provided" according to the relevant provisions in existence. And the processing enterprises may go through the formalities for tax refund on processing fees upon the strength of the "Certificate of Tax Exemption on Processing with Materials Provided". XII. Where an enterprise with foreign investment who is not a VAT taxpayer, or who is a small scale taxpayer, or who is established in the bonded zones, purchases home-made equipment, which is in conformity with the relevant provisions under the "Circular of the State Administration of Taxation concerning Printing and Distributing the 'Trial Measures for the Administration of Tax Refund on Home-Made Equipment Purchased by Enterprises with Foreign Investment'" (No. 171[1999] of the State Administration of Taxation), its tax refund may be handled according to the relevant provisions. XIII. Where an enterprise with foreign investment entrusts other enterprises to undertake the construction of a project by way of contracting for labor and materials, it may sign an agreement with the enterprise undertaking the construction and entrusts it to purchase the kinds of home-made equipment in conformity with the relevant provisions of Document No. 171 [1999] of the State Administration of Taxation. The enterprise undertaking the construction shall then, upon the strength of the entrustment agreement for purchase of the home-made equipment and the "Handbook for Registration of Home-Made Equipment Purchased by Enterprises with Foreign Investment", purchase the home-made equipment, and obtain the special VAT invoices and the Tax Payment Notice (used specially for export goods) for value-added taxes, and hand them over to the enterprise with foreign investment to handle tax refund pursuant to relevant provisions. XIV. The present Circular shall be implemented as of January 1, 2003. |
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