China Enhances Export Tax Rebates to Boost Foreign Trade

May 21, 2014 Posted by China Briefing Reading Time: 2 minutes

SHANGHAI – In response to a recent slump in foreign trade, China’s State Council has announced a swath of new export tax measures, including plans to improve the country’s export tax rebate system and simplify the application process for claiming rebates. A pilot scheme allowing financial leasing enterprises to claim export tax refunds on goods leased to foreign parties will also be expanded.

In a similar move, export VAT refunds were recently extended to foreign trade comprehensive service providers—defined as foreign trade enterprises who provide export-related services for domestic SMEs in the manufacturing industry. Both measures show the Chinese government’s concern with maintaining strong growth in foreign trade (especially as a means to maintain the employment rate). China’s total imports and exports dipped by 0.5 percent in April, and it remains unlikely that the country will meet its target of 7.5 percent growth in foreign trade for 2014.

The newest measures were accompanied by others promoting RMB internationalization, currency hedges for cross-border trade, and export credit insurance. Meanwhile, domestic companies received new incentives to import advanced technology and engage in outward investment for business development purposes. The announcement further called upon the Ministry of Commerce to speed up the implementation of China’s free trade agreements and actively support domestic companies in anti-dumping and anti-subsidy trade suits

China first implemented an export tax rebate system in April, 1985 as a way to enhance the country’s competitiveness in foreign markets by eliminating double taxation on exported goods.

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email china@dezshira.com or visit www.dezshira.com.

Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.

Related Reading

The China Tax Guide: Tax, Accounting and Audit (Sixth Edition)
This edition of the China Tax Guide offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in China, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who need to be able to navigate the complex tax and accounting landscape in China in order to effectively manage and strategically plan their China operations.