On November 15, 2024, China’s Ministry of Finance and the State Taxation Administration issued Announcement No. 15 on Adjustments to Tax Refund Policies for Exports, which will come into effect on December 1. These changes will significantly impact the future business planning of both local and foreign companies involved in export operations from China to other countries, particularly due to higher costs and reduced export volumes.
Two sets of adjustments have been introduced to the export tax refund incentive system, established in 1985, which provides refunds to exporters for Value-Added Tax (VAT) and Consumption Tax (CT) paid prior to exporting their products:
- First adjustment: Tax refunds will be canceled for 59 products, including copper and aluminum products (plates, sheets, bars, etc.), chemically modified oils and fats, and other types of metals.
- Second adjustment: The VAT refund rate will be reduced from 13% (representing a full refund of the VAT paid on purchases at the 13% rate in China) to 9% for 209 products. Affected categories include refined oils, batteries, and photovoltaic products.
Since its inception, the VAT refund system (出口退税) has been considered a strategic policy to enhance the competitiveness of exported goods in the international market. This system allows exporters to recover VAT on goods destined for export, receiving the VAT paid on purchases (fully or partially, depending on the specific refund rate defined for each customs code) directly into their company bank accounts, typically within 1-2 months of submitting the required export documentation.
The tax refund system applies to both trading companies and manufacturing companies, although the application rules differ.
If you have any questions or need assistance in this regard, Feliu, in collaboration with our partners in China, CPO & Partners, can provide the support you need.
