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    1. Wooster is offline

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      #1

      China VAT refund policies - Taxes when dealing with a Chinese Drop shipper

      Going to be doing some business through a Chinese dropshipping supplier. Ive tried to interpret the current VAT refund policy (and just VAT policy in general :/), and havent had any luck.
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    2. NeilG is offline

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      #2
      Firstly, something you should understand here- any derivation from the written rules has to be approached as a minefield. That is, use great caution, and if you want to guarantee that you get what you think is coming to you, FOLLOW THE RULES. Rules on how a venture qualifies for the VAT refund in the first place...

      The enterprise must...

      1. Be designated as a General VAT Taxpayer and
      2. Have obtained a VAT rebate certificate granted by the tax bureau.

      Also, given documents must be provided to the Chinese tax bureau. These typically include...

      ● Form declaring that you paid the VAT to begin with
      ● A form entitled summary declaration form of VAT refund
      ● Export invoice, export declaration form and verification from SAFE (State Administration of Foreign Exchange)

      Failure to provide the required paperwork within 90 days of the transaction will pretty much shoot-down any chances you have of getting your refund.

      The VAT refund rate for-

      ● Rubber tyres and forest products made fast-growing materials is 9%.
      ● Some metal stamping molds and glassware is 11%.
      ● Some types of frozen shrimp and crab is 13%.
      ● Bags, shoes, maps, umbrellas, bedding, and lights is 13%;
      ● Toothpaste and related chemical products, stone materials, aluminium boards and the related ferrous metal product is 11% and 13%.
      ● Some home appliances, motorbikes, agriculture pumps, and bicycles is 13%, and 13%-14%.

      If you end up getting hamstrung by the rather intense protocol on the VAT refund, you can try...

      Tariff coding: Review the description and tariff-coding for your affected products to ensure everything is labelled correctly.
      Supply Chain Model: The efficiency of any model used in your supply chain should be checked out, from tax to manufacturing.
      Functions and risks: Functions and risks performed by your China operations ought to be examined to decide whether some functions could be performed and risks assumed outside China to lower freight on board prices of related-party exports.
      Transfer pricing: Do some research to see if functions and risks done in China are actually appropriate for your business activities. Don’t want to be paying for things you don’t need to be doing in China from the start!
      Special purpose vehicles: “Vehicles” here refers more to enterprises and other suppliers, businesses used (like Chinese foreign invested commercial enterprises) Not planes, trains, or automobiles, just so we’re clear. Special purpose vehicles could plausibly reduce the impact of the VAT refund changes to begin with.
      Designated zones: Use of designated special purpose zones- such as Export Processing Zones/Free-trade Zones-- can be used to reduce impact.
      Increase of bonded imports: Increase of imports and/or changing domestic purchases into imports can help reduce the VAT increase. Bonded logistics parks could help with this process.
      Vertical integration/segregation: You can change the operations you perform in China, which could possibly change the products exported, and therefore change the tariff code, possibly bringing your products into a higher VAT refund-bracket.
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    3. Iucounu is offline

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      #3

      Quote:

      Originally Posted by Wooster View Post
      Going to be doing some business through a Chinese dropshipping supplier. I’ve tried to interpret the current VAT refund policy (and just VAT policy in general :/), and haven’t had any luck.
      BUZZ! Wrong! Earlier this year, China revoked the VAT refund on several items considered polluting; high energy-consuming; or scarce, locally-sourced products. Circular 57, as the policy change is cryptically called, effects these products:
      ● Steel products
      ● Nonferrous metal products
      ● Silver powder
      ● Alcohol, cornstarch
      ● Pesticides, pharmaceutical and chemical products
      ● Plastic, rubber and glass products

      Got to keep with the times, NeilG. When was the last time you dealt with China, 2008?

    4. NeilG is offline

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      #4
      Something like that, yes . I had no idea there was yet more sweeping changes to the Chinese VAT system. The 2008 changes with which I was familiar already eliminated the VAT refund for a lot of products, and I guess I figured they wouldn’t be eliminating any more within two years! I guess there really isn’t any preferential treatment for foreign exporters in the China market any more. Not all that surprising, really, when you think about it.

    5. Wooster is offline

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      #5
      Wow, cheers both of you! I’ve been trying to get decent information on this whole thing, and this is the first time I’ve gotten anything approaching real help. Chinese bureaucracy isn’t something I fancy navigating on my own.

    6. Jerry Tran is offline

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      #6
      i am importer steel products from China to Australia. i would like to know how can i rebate VAT for goods exported in China???

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