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

The term "export tax rebate" sounds like a good thing that falls from the sky, but do you really know which taxes it refunds? When Mr. Zhang was handling export business recently, the finance department mentioned "a tax rebate rate of 13%", and he was at a loss: "Is this refund for VAT or customs duties?" Today, let's lift the mysterious veil of export tax rebate and see where this "welfare" actually comes from.

Export tax rebate does not refund all types of taxes, but mainly targets the VAT and Consumption Tax that have been paid in the production and circulation links of commodities. Specifically, it includes:

• Value-Added Tax (VAT): The main tax type in the circulation of commodities in China, part or all of the levied amount is refunded when exported;
• Consumption Tax: Only applicable to specific commodities such as tobacco, alcohol, and cosmetics, and the full amount is refunded when exported.

In the case of Ms. Li's textile exports, the 13% she got back was exactly the VAT paid in the production process, while customs duties, corporate income tax, etc. are not within the scope of tax rebate.

This stems from the internationally accepted principle of "taxation at the place of consumption": The country where the commodity is finally consumed is the one that levies the tax. The essence of export tax rebate is to avoid double taxation, allowing Chinese commodities to enter the international market at "zero tax cost". For example, a mobile phone has paid VAT when produced in China. If it is subject to sales tax again after being exported to the United States, the enterprise will bear double tax burdens.

• Misunderstanding One: "Customs duties can also be refunded". In fact, customs duties are levied by the importing country, and our country's export process never involves them;
• Misunderstanding Two: "All commodities can be refunded". Resource products such as crude oil and rare earths often do not enjoy tax rebates;
• Misunderstanding Three: "Tax rebate = pure profit". Tax rebate is just the return of tax burdens and still needs to be included in the enterprise's income declaration.

The next time you hear "export tax rebate", you might as well ask yourself: Is this money really being used in the right place? If you are a foreign trade practitioner, do you fully understand the tax rebate rates of different commodities? Welcome to share your tax rebate stories or questions in the comment section, and the expert team of Zhongshitong will answer them for you!