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.