June 2007
Significant Changes to Export VAT Refund Rates
On 18 June 2007, the Chinese Ministry of Finance and State Administration of Taxation jointly issued Cai Shui [2007] No.90 (“Circular 90”) which introduces significant changes in China’s export VAT refund rates to echo the increasing pressure and critics from major trading partners with respect to the excessive trade surplus, together with the concerns of resources preservation and environmental protection in China.
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The export VAT refund rates reduction will come into effect on 1 July 2007, with transition treatments for only very few industries.
As the range of commodities affected by Circular 90 is very wide and that the magnitude of the rates reduction is not nominal, it is important recognise the potential impact to one´s business.
There are options which may, depending on the circumstance of the business, reduce the impact brought by Circular 90 (if any).
This China VAT Alert sets out further details as well as PricewaterhouseCoopers´ observations with respect to Circular 90.
