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	SUPPLEMENTARY NOTICE OF THE MINISTRY OF FINANCE AND THE STATE ADMINISTRATION OF TAXATION ON ADJUSTING THE TAX REFUND RATE FOR EXPORTED GOODS

	(No. 238 [2003] of the State Administration of Taxation, Ministry of Finance promulgated on December 2, 2003 and shall come into force as of January 1, 2004)


SUBJECT : TAX REFUND; RATE FOR EXPORT
ISSUING DEPARTMENT : THE STATE ADMINISTRATION OF TAXATION, MINISTRY OF FINANCE OF THE PEOPLE'S REPUBLIC OF CHINA
ISSUE DATE : 12/02/2003
IMPLEMENT DATE : 01/01/2004
LENGTH : 820 words
TEXT :

The "Notice of the Ministry of Finance and the State Administration of Taxation on Adjusting the Tax Refund Rate for Exported Goods" (No. 222 [2003] of the Taxation Department of the Ministry of Finance) has prescribed the tax refund rates applicable to exported goods since January 1, 2004. We hereby give our supplementary notice concerning other relevant policies on tax refund for export as follows:

I. For the goods exported by small-scale taxpayers on their own or by means of authorization, the tax-exemption policies shall continue to be implemented, and their tax amount on purchase items shall neither be deducted nor be refunded. If taxes are permitted to be refunded to export enterprises for their export of goods purchased from small-scale taxpayers, a tax refund rate of 5% shall be applied to any goods whose tax refund rate for export is prescribed by Document No. 222 [2003] of the Taxation Department of the Ministry of Finance to be 5%; and a tax refund rate of 6% shall be applied to any goods whose tax refund rate for export is prescribed by Document No. 222 [2003] of the Taxation Department of the Ministry of Finance to be higher than 5%.

II. Whoever exports products within the "Catalogue on Export of Hi-tech Products" (2003 Edition) shall uniformly comply with the tax refund rate prescribed in Document No. 222 [2003] of the Taxation Department of the Ministry of Finance.

III. Computer software in export (Customs Export Code: 9803) shall be exempted from taxes, and their tax amount on purchase items shall neither be deducted nor be refunded.

IV. For the Chinese domestically produced articles and domestic labor services purchased by foreign embassies (consulates) to China and their diplomats, the domestically produced equipment purchased by foreign-funded enterprises and qualified for tax-refund conditions, as well as the mechanical and electronic products for which international bid invitation was held in accordance with Article 9 of the "Notice of the State Administrative institution of Taxation on Some Issues Concerning Tax Refund for Export" (Document No. 165 [2000] Promulgated by the State Administration of Taxation) with utilization of loans of foreign governments or international financial organizations and for which the domestic enterprise won the bid, as well as the ocean engineering structures sold by the production enterprises prescribed in the "Notice of the Ministry of Finance and the State Administrative Institution of Taxation on Applying VAT Refund to Ocean Engineering Structures" (No. 46 [2003] of the Taxation Department of the Ministry of Finance) to domestic maritime petroleum and natural gas exploitation enterprises, taxes shall still be refunded, deducted or exempted in accordance with the original policies.

The domestically produced equipment purchased by foreign-funded enterprises, with the taxes on which permitted to be refunded, covers a range of domestically produced equipment purchased within China, which conforms to the investment projects in the catalogue of encouraged foreign investment industries in the "Catalogue for the Guidance of Foreign Investment Industries", that is, Order No. 21 jointly promulgated by the former State Planning Commission, the former State Economic and Trade Commission and the former Ministry of Foreign Trade and Economic Cooperation.

The tax refund rate applicable to the "exemption or deduction" policies for the steel "specially used for processing export" sold by the named steel enterprises prescribed in the "Notice of the State Administration of Taxation, the State Economic and Trade Commission, the Ministry of Finance, the General Administration of Customs, and the State Administration of Foreign Exchange on Printing and Distributing the Detailed Rules for the Implementation of the Measures for Promoting Steel Production in Place of Steel Import" (No. 68 [1999] Promulgated by the State Administration of Taxation) to processing trade enterprises shall be notified separately.

V. The domestically sold or purchased goods other than those prescribed in Article 4 of the present Notice shall be deemed as the goods whose taxes are permitted to be refunded or exempted upon export. The "exemption, deduction or refund" of taxes shall be handled or the amount of "exempted or deducted" taxes shall be calculated uniformly according to the tax refund rate prescribed in Document No. 222 [2003] of the Taxation Department of the Ministry of Finance. For such goods, the "tax amount not refundable or deductible" shall be calculated and be converted into the costs.

The tax amount not permitted to be exempted or deducted = the sales amount on common invoices X (tax levying rate of the sold goods - tax refund rate of the sold goods)

VI. The present Notice shall come into force on January 1, 2004. The export date indicated by the customs on the "Customs Declaration List for Exported Goods (the sheet of tax refund for export) " shall be deemed as the time criterion for Articles 1 through 3 of the present Notice; while the time of issuance by the seller of common invoices shall be deemed as the time required by Articles 4 and 5.