TranexioAI-native trade platform
简EN繁
Sign inBook a demo

Exempt-and-refund method (免退税)

Chinese：exempt-and-refund methodAlso known as：VAT exempt-and-refund method / exempt-and-refund approach / foreign trade company refund method

The exempt-and-refund method is the VAT refund method for exports by foreign trade companies in China. Exports are exempt from output VAT, and the VAT paid on purchase is refunded at the taxable amount on the special VAT invoice for the exported goods multiplied by the export refund rate.

Key points

  • Applies to exporters without production capacity (foreign trade companies) and other entities required to use the exempt-and-refund method.
  • Refundable amount = tax base × export refund rate; the tax base is usually the amount on the special VAT invoice.
  • The rate difference is not refundable and is transferred out of input VAT to cost; where the same goods are exported in several lots, the calculation is apportioned according to how invoices map to customs declarations.

In practice

The heart of the method is matching invoices to customs declarations. Each export must be linked to its input invoices by product, quantity and value. In real business, one invoice may cover several exports and one export may draw on several invoices, often with differing product descriptions and units of measure that need converting and apportioning. Get the links wrong, and both the refund and the cost are wrong.

Refund rates are also set by commodity code, so changes in classification affect the rate. Documents must be collected and the claim filed within the prescribed period, and exports not filed in time may be taxed as domestic sales. Companies therefore need a ledger that shows, in real time, the document status, fileable amount and expected refund for every export.

How Tranexio supports it

Under the exempt-and-refund method, Tranexio links customs declarations to input invoices automatically, supports many-to-many apportionment, calculates the refundable amount and transfers the rate difference to cost, and pushes the results to finance for posting. See Export tax refunds.

Frequently asked questions

How is the refundable amount calculated?

The basic formula is VAT refundable = VAT refund (exemption) tax base × export refund rate. For foreign trade companies, the tax base is generally the amount on the special VAT invoice for the exported goods purchased, or the dutiable value on the customs import VAT payment certificate.

How is the difference between levy and refund rates treated?

The part of input VAT calculated at the refund rate is refundable; the part corresponding to the difference between the levy rate and the refund rate is not, and must be transferred out of input VAT and charged to the cost of the exported goods. No difference arises when the two rates are equal.

Related

See how Tranexio fits your trade operations

Tell us how you trade and what systems you run today — a product specialist will walk you through your own scenarios.

Book a demo →

Updated 2026-10-06