Is export tax rebate free money? Don't be silly!

"Mr. Zhang recently received an overseas order, but his finance told him that he could 'get back' hundreds of thousands of yuan in taxes!" This may sound like a fairy tale, but it is a real benefit for export enterprises. This article will take you through the tax fog and help you understand this policy that foreign trade bosses both love and hate.

Many people mistakenly think that export tax rebate is a "subsidy" given by the government, but it is not. The essence of value-added tax is to levy tax on consumption behavior. When goods are sold abroad, the consumption behavior occurs overseas. According to the principle of international tax neutrality, the levied tax should be refunded. The current policy in China implements the "exemption, credit and rebate" or "exemption and rebate" system for export goods, and the tax rebate rate ranges from 5% to 16%.

• Incomplete Documents Type: Ms. Li's clothing factory had its 300,000 yuan tax rebate application rejected due to the lack of a sea waybill.
• Overdue Time Limit Type: Failure to declare within 90 days after the issuance of the customs declaration form is regarded as an automatic waiver.
• Mismatch between Purchase and Sale Type: The obvious discrepancy between the name of the purchase invoice and the exported goods triggered an inspection.

Enterprises can judge their eligibility through simple self-tests:

1. Check whether the customs code is in the export tax rebate rate table.
2. Confirm that the difference between the amount of foreign exchange collection and the amount of customs declaration does not exceed 5%.
3. Verify whether the value-added tax payment credit rating is above level B.

Special attention should be paid to special trade methods: Processing with Supplied Materials for Re-export only enjoys exemption but no rebate, Sales in Bonded Areas are regarded as domestic sales and taxed, and Cross-border E-commerce Retail Export is subject to the approved collection. An electronics factory finally had to pay back taxes and fines amounting to 1.5 times the value of the goods because it mistakenly declared tax rebate for transactions in the bonded area.

With the launch of the fourth phase of the Golden Tax Project, tax authorities have achieved:

• Intelligent matching of customs declaration forms and value-added tax invoices.
• Cross-verification of logistics trajectories and capital flows.
• Dynamic monitoring of the industry tax burden rate.

According to the data of the General Administration of Customs, the average tax rebate rate of national export enterprises reached 13.8% in 2022, but 21% of small and micro enterprises have never applied. You may as well open the e-tax bureau and do a simple calculation in the "Export Tax Rebate Management" module. Welcome to share your tax rebate stories in the comment area or leave messages to consult specific operation problems.