PROVISIONS OF THE MINISTRY OF FINANCE FOR THE COLLECTION AND REFUND OF PRODUCT TAX AND VALUE ADDED TAX ON IMPORT AND EXPORT PRODUCTS
(Issued on March 22, 1985)
ISSUING-DEPT: MINISTRY OF FINANCE
In order to cater to the development of the import and export trade and the reform of the foreign trade system, the following Provisions are hereby formulated in accordance with the regulations on product tax (draft) and the regulations on value added tax (draft):
[Article 1] Foreign trade enterprises (including manufacturing and trading company, the same below) and other organizations shall pay product tax or value added tax on their imported products pursuant to tax rates prescribed.
[Article 2] The following products are exempt from product tax or value added tax:
Cereals, raw sugar, chemical fertilizer and agricultural chemicals imported with the approval by the state;
Instruments and equipment to be directly used in scientific research, scientific experiment and teaching;
Materials and equipment rendered gratuitously by foreign governments and international organizations;
Equipment, raw materials (including auxiliary materials and packing materials) and spare parts imported to be used in processing on order, kits assembling and compensation trade;
Goods exempt from taxation specially approved by the State Council and the Ministry of Finance;
Raw materials and spare parts imported for manufacturing export products are 85% or 95% exempt from tax depending on variety of products.
[Article 3] Foreign trade enterprises or other organizations importing products independently shall pay their product tax or value added tax directly to the customs. In case products are imported by foreign trade enterprises or other organizations as agents for import organizations, it is import agents that shall pay product tax or value added tax to the customs for import organizations.
[Article 4] Product tax and value added tax shall be levied on import products based on tax-included price whose formula is as follows:
Tax-included price (CIF price+amount of customs duty) (1-rates of product tax or value added tax
Taxable amount=tax-included price X rates of product tax or value added tax.
[Article 5] Tax payers of imported products shall pay tax within the prescribed time limit. In case of failure to do so, the tax authorities, in addition to setting a new time limit for tax payment, shall impose a surcharge for overdue payment equal to 0.1% of the overdue tax for every day in arrears, starting from the first day payment becomes due.
[Article 6] When products imported with tax reduction or exemption are used for other purposes or sold domestically, a supplementary product tax or value added tax shall be imposed on these products pursuant to relevant provisions as far as their import stage is concerned.
[Article 7] Once tax-levied products, except crude oil and refined oil, exported by foreign trade enterprises and other export organizations are through customs clearance, the levied amount of product tax or value added tax shall be refunded to enterprises which produce these export products. The amount of value added tax levied on products at the phase of production shall be withdrawn as long as products exported fall into the category of products subject to imposition of value added tax; the amount of product tax levied on products at the last phase of production shall be refunded as long as products exported fall into the category of industrial goods subject to imposition of product tax; and the amount of product tax levied on products at the phase of procurement shall be refunded as long as products exported are agricultural, aquatic products and products of forestry and animal husbandry.
Products manufactured and exported directly by manufacturing enterprises themselves are exempt from product tax or value added tax once they are through customs clearance. As long as products exported fall into the category of products subject to imposition of value added tax, the paid amount of tax under “deduction items” shall be refunded, in addition to the exemption of value added tax which would otherwise be paid by manufacturing enterprises.
[Article 8] Export enterprises handling exports themselves or entrusting other enterprises as agents for exporting their products shall, after completing customs clearance and necessary financial management procedures by treating these exports as sales, fill out Application Forms for Refund (or exemption) of Taxes on Export Products and submit these forms together with related documents such as receipts (copies or photo copies), Certificates of Export Product; etc. to the local tax authorities where enterprises are located for refund (or exemption) of tax upon examination and verification by tax authorities.
[Article 9] The refundable amount of tax on an export product is the amount of the purchased product multiplied by rates of product tax or value added tax. The amount of the purchased product refer to the actual tax-included amount which export enterprises spend on purchasing the product, excluding various expenses incurred in circulating stages such as procurement, transportation, and self-provision of packages, etc. In case the purchase price includes such expenses, the refundable amount of tax shall be assessed only after such expenses are deducted from the purchase price. In order to simplify formalities, tax authorities shall work out a deduction ratio, based on which expenses are deducted from the purchase price.
[Article 10] Local tax authorities shall handle tax refund (or exemption) matters by batches or on a daily, ten-day period and monthly basis depending on the volume of refundable (or exemption) amount of tax involved.
[Article 11] Where export products with tax refunded (or exempted) are rejected by customs or returned by foreign importers, export enterprises must go through tax return formalities with the local tax authority by paying the refunded (or exemption) amount of tax.
[Article 12] For export products which have already been subject to domestically unified reduction and exemption of product tax or value added tax, tax shall be refunded according to the actual amount of tax levied and shall not be refunded where tax has not been collected. Provisions for tax reduction and exemption on products manufactured domestically do not apply to import products.
[Article 13] With provisions for tax reduction (or exemption) on export products entering into force, export products sold by industrial enterprises to foreign trade enterprises or other enterprises are not eligible for reduction and exemption of product tax or value added tax except special cases approved by the State Council and the Ministry of Finance.
[Article 14] The customs shall deputize for collecting product tax and value added tax on taxable import products and shall turn in these taxes to the state treasury as the state budget revenue.
[Article 15] Where product tax or value added tax are refunded on export products, those export products handled by foreign trade enterprises under the Ministry of Foreign Economic Relations and Trade and other competent authorities of the government shall be refunded from the state budget revenue, while export products handled by industrial enterprises and local foreign trade enterprises shall be refunded from local budget revenue.
With regard to export products handled by united foreign trade enterprises, tax shall be refunded from state or local budget revenue depending on superior-subordinate relationship among participating parties in the united foreign trade enterprises in accordance with provisions contained in agreements and contracts concerned.
[Article 16] Chinese-foreign joint ventures, Chinese-foreign cooperative enterprises and wholly-owned foreign enterprises shall still implement relevant provisions concerning consolidated industrial and commercial tax.
[Article 17] These Provisions shall come into force on April 1, 1985.
SUPPLEMENTARY PROVISIONS OF THE MINISTRY OF FINANCE AND THE CUSTOMS GENERAL ADMINISTRATION FOR THE COLLECTION AND REFUND OF PRODUCT TAX AND VALUE ADDED TAX ON IMPORT AND EXPORT PRODUCTS
(Issued on April 17, 1985)
ISSUING-DEPT: MINISTRY OF FINANCE
The Report on the Collection and Refund of Product Tax and Value Added Tax on Import and Export Products by the Ministry of Finance and Provisions of the Ministry of Finance for the Collection and Refund of Product Tax and Value Added Tax on Import and Export Products (hereinafter referred to as the Provisions), both of which were approved by the State Council and contained in the No. 43 document (State Council document 1985), came into force on April 1, 1985. The following supplementary provisions are formulated so as to deal with some matters brought about during the implementation of the Provisions:
[Article 1] Provisions for the collection of tax on imports and refund (or exemption) of tax on exports apply only to import and export products which have been through customs entry and customs clearance.
[Article 2] That “Cereals, raw sugar, chemical fertilizer and agricultural chemicals imported with approval by the state are exempt from product tax”, which is stipulated in Article 2 of the Provisions, refers to cereals, raw sugar, chemical fertilizer and agricultural chemicals listed in the import plan laid down by the State Planning Commission. Therefore, when foreign trade enterprises import these products, they must show the related documents approved by the State Planning Commission to the customs, against which the latter shall release these products duty free.
[Article 3] The following specific duty-free proportions are applicable to raw materials and spare parts imported exclusively for the manufacture of export products.
(1) The 13 products below are 95% duty-free:
a. Various tawed furs;
b. Various leather skins;
c. Various synthetic leather and artificial leather;
f. Various jade, precious stones, diamond and semi-finished jade, precious stones, and diamond;
g. Hawksbill turtle, coral and amber;
h. Wool tops and wool yarn;
j. Cotton cloth with a width of 64″ and above;
k. Cotton polyester cloth with a width of 64″ and above;
I. Garment fabrics made of pure wool, pure cotton, polyester and blend fibers; linings and artificial furs;
m. Spare parts of various machinery and electric products;
n. Ready-made packing wares.
(2) Other raw materials and spare parts are 85% duty-free.
[Article 4] Those provisions formulated by the State Council or the Ministry of Finance in the past for the reduction and exemption of tax on certain import products as special cases shall be implemented continuously until termination of these provisions.
[Article 5] Where spare parts are imported or exported in complete sets, product tax or value added tax shall be levied or refunded on these parts pursuant to appropriate rates applicable to complete machines.
[Article 6] When export enterprises or enterprises deputizing for export declare their products to the customs for export, they shall fill in Certificates of Export Product, in addition to customs clearance forms. Once products are exported, the customs shall affix their signature on the Certificate of Export Products, which serves as a voucher for tax refund or exemption.
The Customs shall charge export enterprises or enterprises deputizing for export 10 yuan (Renminbi) as certificate fee for each Certificate of Export Product issued.
[Article 7] When industrial enterprises directly export products which are subject to the collection of value added tax and assess their tax-exempt amount of value added tax and refundable amount of tax under “deduction items”, they can adopt a “first-collection-then-refund” method in that export products shall firstly be levied as if they were products for domestic sale and then be refunded, once exported, in such a manner that the refundable amount shall be the total amount of export product multiplied by rates of value added tax.
[Article 8] It is quite difficult to ascertain which column of tax rate was applied at the factory to some export products with multi-column rates such as cigarettes, alcoholic drinks, cement and nitrogenous fertilizer, etc. once they are exported. Therefore, in order to simplify formalities and take into account both the state policy of encouraging exportation and the actual export situation of these four products, the following rates shall be applied for refunding tax on aforementioned products:
Cigarettes (60%): alcoholic drinks (30%); beer (20%); cement (10%); and nitrogenous fertilizer (5%).
[Article 9] With regard to the following textile products exported by foreign trade enterprises, tax shall be refunded based on rates applicable to products which are manufactured on a consecutive basis:
Artificial furs; other woolen textiles; silks and satins; other machine-made silk knit goods; pure linen cloth; fabrics of wool, pure linen and knitted silk; knitted tube-shaped cloth, thin knitted cloth and other knit wears; and textiles replicas.
[Article 10] That “export products sold by industrial enterprises to foreign trade enterprises or other enterprises are not eligible for reduction and exemption of product tax or value added tax . . .”, which is contained in Article 13 of the Provisions, also provides that the taxable amount of product tax and value added tax on export products shall not be reduced or exempted for the purpose of returning loans.
[Article 11] Provisions for reduction of tax on export cosmetics, fireworks, incinerating products, and aluminum zips previously approved by the Ministry of Finance shall be implemented until December 31, 1985. Such being the case, as long as the above-mentioned four products are exported within this year, tax refund matters shall be handled on the principle that tax shall be refunded with the same amount of tax collected. Beginning on January 1, 1986, the aforementioned four products shall be levied according to appropriate rates listed under tax rate classification schedules of product tax. Once these products are exported, tax shall be refunded pursuant to the rates prescribed.
[Article 12] Certificates of Export Product (forms are herein omitted) shall be exclusively printed by the Customs General Administration, while Application Forms for Refund (or exemption) of Taxes on Export Product (forms are herein omitted) shall be printed by tax bureau under provinces, autonomous regions and municipalities directly under the State Council. Before Certificates of Export Product and Application Forms for Refund (or exemption) of Taxes on Export Product are uniformly printed and distributed, self-printed certificates or application forms pursuant to prescribed uniform forms can be used where export enterprises require customs clearance and tax refund on export products.