China Enhances Export Tax Rebates to Boost Foreign Trade

In response to a recent slump in foreign trade, China’s State Council has announced a swath of new export tax measures, including plans to improve the country’s export tax rebate system and simplify the application process for claiming rebates. A pilot scheme allowing financial leasing enterprises to claim export tax refunds on goods leased to foreign parties will also be expanded.

In a similar move, export VAT refunds were recently extended to foreign trade comprehensive service providers—defined as foreign trade enterprises who provide export-related services for domestic SMEs in the manufacturing industry. Both measures show the Chinese government’s concern with maintaining strong growth in foreign trade (especially as a means to maintain the employment rate). China’s total imports and exports dipped by 0.5 percent in April, and it remains unlikely that the country will meet its target of 7.5 percent growth in foreign trade for 2014.

RELATED: China Clarifies Tax Refund Policy on Goods Exported by Foreign Trade Service Providers

The newest measures were accompanied by others promoting RMB internationalization, currency hedges for cross-border trade, and export credit insurance. Meanwhile, domestic companies received new incentives to import advanced technology and engage in outward investment for business development purposes. The announcement further called upon the Ministry of Commerce to speed up the implementation of China’s free trade agreements and actively support domestic companies in anti-dumping and anti-subsidy trade suits
China first implemented an export tax rebate system in April, 1985 as a way to enhance the country’s competitiveness in foreign markets by eliminating double taxation on exported goods.

This article was first published on China Briefing.
 
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