Key points
- Two basic methods: foreign trade companies use the exempt-and-refund method and manufacturers the exempt-offset-refund method; exemption-only and taxable treatment apply in other cases.
- Filing basis: the export customs declaration, input documents such as special VAT invoices, and receipt and shipping records where required; documents must be filed and retained as prescribed.
- Refunds can be filed through the electronic tax bureau or the China International Trade Single Window.
In practice
Export tax refunds are an important source of cash for foreign trade companies, and the hard part is document completeness and matching. Each export must be matched to its customs declaration, one or more input invoices, receipt records and transport documents. If anything is missing or inconsistent, the claim cannot be filed or is flagged by the tax authority for review. Where several invoices relate to one declaration, or one invoice to several declarations, amounts must be apportioned by quantity or value.
In the accounts, the gap between input VAT and the refundable amount calculated under the exempt-and-refund method – the difference between levy and refund rates – is not refundable and must be charged to cost. Exports whose documents remain incomplete for a long time need alerts and an assessment of the risk of being treated as domestic sales.
How Tranexio supports it
In the current release Tranexio provides a refund workbench for foreign trade companies under the exempt-and-refund method: document completeness checks, many-to-many apportionment, calculation of the refundable amount and transfer of the rate difference to cost, multi-way reconciliation, document filing and overdue alerts. Filing can connect to the electronic tax bureau via the integration hub; the exempt-offset-refund method for manufacturers is on the roadmap. See Export tax refunds.