Deciphering China's tariffs and export tax rebates

According to the decree of China Customs before December 2022, imported goods usually need to pay the following taxes and fees:

• VAT: Imported goods are also subject to VAT, a fixed rate calculated on the value of the goods and the total amount of duties. Usually, the VAT rate is 13%, but there may be special tax rates depending on the category of interest.
• Consumption tax: Some specific imported goods, such as high-priced luxury goods, tobacco, and alcohol, may also need to pay consumption tax. The consumption tax rate is also determined according to the type and value of the goods, and different interests may have different tax rates.
• Import VAT: Some imported goods also need to pay input VAT, an additional tax calculated based on the value of the goods and the VAT rate.

For example, if an imported TV set worth 100,000 RMB is calculated according to the applicable tax rate, the taxes and fees that may need to be paid are as follows:

Tariff: RMB 100,000 × 10% (assuming a tariff rate of 10%) = RMB 10,000

Value-added tax: (RMB 100,000 + RMB 10,000) × 13% (assuming a value-added tax rate of 13%) = RMB 14,300

According to the mainland China tax laws and regulations promulgated before the end of December 2022, we analyze and discuss issues related to tax rebates for export products of import and export enterprises in mainland China:

• Export tax rebate rate: Mainland China implements an export tax rebate policy for export products, and the tax rebate rate varies with product categories. The tax rate can be queried according to the tax refund category catalog of China Customs, which includes the tax refund tax rate and conditions of various products.
• Handling tax business: Taiwanese business people conducting export tax refund business in mainland China must take it by relevant tax regulations and procedures. Generally speaking, Taiwanese business people need to submit the corresponding tax refund declaration documents and relevant supporting documents to the local tax authorities and complete the appropriate review and declaration procedures by the requirements of the tax authorities.
• Tax refund declaration deadline: Mainland China has set a specific deadline for tax refund declarations, generally within a certain period after export goods are loaded on board (or on a flight). The deadline can be determined according to the requirements of the local tax authorities and relevant laws and regulations, and attention should be paid to timely understanding and reporting on time.
• Penalties for late declaration: If Taiwanese businessmen fail to file tax refund declarations on time, they may face corresponding penalties. Common penalties may include fees for delaying tax refund declarations or punitive interest. The relevant regulations of the local tax authority can inquire about specific penalties.

Important note: The above answers are only based on mainland China's tax laws and regulations promulgated before the end of December 2022. As tax laws and regulations may change, it is recommended that Taiwanese businessmen consult professional tax consultants or local tax authorities before conducting relevant tax business to ensure they can obtain the latest tax laws and regulations.

REFERENCE:

Chao, C.-C., Yu, E. S. H., & Yu, W. (2006). China's import duty drawback and VAT rebate policies: A general equilibrium analysis. China Economic Review, 17(4), 432-448. doi:10.1016/j.chieco.2006.02.005
Chao, C.-C., Yu, E. S. H., & Yu, W. (2006). China's import duty drawback and VAT rebate policies: A general equilibrium analysis. China Economic Review, 17(4), 432-448. doi:10.1016/j.chieco.2006.02.005

Lee, W., Ma, H., & Xu, Y. (2021). Export tax rebate and the margins of exports: product-level evidence from a quasi-natural experiment. International Tax and Public Finance, 28(2), 386-404. doi:10.1007/s10797-020-09633-2