In order to ensure the coordination of policies after the implementation of the Value-Added Tax Law of the People’s Republic of China and the Implementation Regulations of the Value-Added Tax Law of the People’s Republic of China, and to continue the current systems and practices, relevant departments have made announcements on matters related to the applicable VAT and consumption tax refund (exemption), exemption or taxation policies for exported goods, cross-border sales services, and intangible assets (hereinafter collectively referred to as export business).
First of all, the export business applicable to the VAT refund (exemption) policy covers many aspects.
In terms of export goods, such as selling to overseas entities or individuals, declaring to customs and actually leaving the country, etc., it is applicable.
There are also many situations where goods are deemed to be exported, including sales to special areas, sales of goods to relevant duty-free companies, etc.
In terms of cross-border sales of services and intangible assets, sales to overseas units of specific services and intangible assets that are completely consumed overseas, such as research and development services, design services, etc., as well as international transportation services, space transportation services, etc. are within the scope.
In terms of VAT refund (exemption) methods, they are divided into tax exemption and tax refund methods and tax exemption and refund methods.
The tax exemption, credit and refund method applies to production enterprises exporting self-produced goods, etc.; the tax exemption and refund method applies to foreign trade enterprises or other units exporting goods, etc.
Regarding the VAT export refund rate, unless otherwise specified, the export business refund rate is the applicable tax rate, and different situations have different implementation time regulations. At the same time, export businesses that are applicable to different refund rates need to declare separately, etc.
The tax calculation basis for VAT refund (exemption) is determined in different ways according to different export businesses. For example, the tax calculation basis for exported goods by manufacturing enterprises is mostly related to the FOB price.
There are also clear formulas and methods for the calculation of VAT exemption, credit and refund.
There are also detailed regulations on the export business that is subject to the VAT exemption policy, including various situations such as small-scale taxpayers exporting goods, old books, etc.
Export businesses that are subject to VAT taxation policies, such as goods for which export tax refunds (exemptions) are cancelled, and consumer goods sold to special areas, must pay VAT in accordance with regulations.
For exported goods subject to consumption tax refund (exemption), tax exemption or taxation policies, the corresponding consumption tax policies are also different according to the different application situations of value-added tax policies.
Among other provisions of the export business value-added tax and consumption tax policies, they involve filing and declaration, other tax refund (exemption) and other provisions, as well as accounting requirements for foreign trade enterprises, production enterprises’ declaration of tax refund (exemption) under specific circumstances, etc.
This announcement will take effect from January 1, 2026, and at the same time abolish some old policies.
This series of policy adjustments will have an important impact on the export business, help standardize export tax management, and promote Chinese products to better market to the world.
