China Export VAT Refund

CHINA ORIENTIR company offers services on VAT refund in China in your favor through our Chinese export company.

If your Chinese supplier doesn't have export licence, but it can issue Chinese special VAT invoice at the purchase of goods on domestic market of China (i.e the cost of a product includes an "inward" VAT) and the price already includes VAT, in this case after the fact of export of goods from China you have the opportunity to refund part of this "inward" VAT in your favor (through our China import-export company).

China Orientir specializes at providing export VAT refund services for foreigners in China (other companies usually refund VAT only to domestic enterprises).

When your China supplier is not exporter and his price on China market includes VAT, then you better to refund it after export, it will give you an additional profit!

Conditions for China export VAT refund:

It is necessary that the following basic conditions have been met:

• payment for China supplier's goods should be 100% done through the bank account of our Chinese company (the funds will be re-transferred at the same day to Chinese supplier);
• special VAT invoice from a supplier should be drawn up on our Chinese company name;
• China export customs clearance should be carried out through our Chinese company;
• payment for goods should be 100% made to China supplier before the day of export from China.

Stages of China VAT refund process:

Stages for VAT refund in China through our Chinese import-export company are as follows:

The first stage (preliminary):

Please confirm at your Chinese suppliers (or we can do it for you) -

• do they have an export license?
• whether the price includes China VAT (the tax rate usually is 17%)?
• whether they can issue special VAT invoice (专用增值税发票) to the name of our Chinese company (as your China export agent)?

If you get the answer that Chinese supplier doesn't have export licence and his price includes VAT, and he can issue special VAT invoice, so in this case it makes sense to refund part of this VAT to your favor after export from China.

The second stage:

The funds for purchased at China supplier goods should be transferred to our Chinese company foreign currency account. After amount received we make currency exchange procedures (exchange to local currency (RMB). Whole procedure of foreign currency control procedure takes about 2-3 days. Immediately after this procedure finished we re-transfer the amount under invoice to your China supplier's company account (in local currency). Please note that amount of our commission for export procedures services (1.35% of Chinese supplier's invoice sum) will be deducted from these funds.

It is common practice in business to divide payments to supplier to two parts: 30% of advance payment paid before production and 70% balance payment paid after production. And we usually request to transfer 100% of payment under supplier's invoice before the moment of beginning of export customs procedure in China (the requirement is connected to strict foreign currency control in China).

The third stage:

Chinese supplier should issue to our Chinese export company a special VAT invoice before the moment of beginning of export customs procedure in China (the requirement is connected to strict VAT control in China). The invoice should be correctly filled (true information about name, quantity and price of goods).

The fourth stage:

Export customs procedures should be made through our Chinese export company and in the name of our Chinese export company.

The fifth stage:

In about a month after export is finished, customs authorities will issue original of export customs declaration to our company (which is necessary document for VAT refund procedure).  After it our Chinese export company will apply for VAT refund to China tax authorities.

The sixth stage:

A few months (usually 2 to 3 months in Guangzhou) after application for VAT China and checking of supporting documentation, tax authorities will actually transfer amount of refunded VAT to our Chinese export company account.  After the sum received we re-transfer it, besides our commission for VAT refund (30% of refunded sum), by any convenient way to you (by cash or by bank transfer).

Our commission for services related to VAT refund in China:

Our commissions for services related to VAT refund in China are as following:

• Commission for export procedures - 1.35% of amount of invoice issued by Chinese supplier. The export procedures include following:
  • accepting foreign currency from foreign bank to account of our Chinese company in Chinese bank, exchange to local currency (Chinese Yuan, RMB) and following re-transfer in local currency to Chinese supplier (a lot of Chinese suppliers can not get payment in foreign currency)
  • preparation of export documents, processing of export customs procedures in China customs, providing necessary documents requested by customer for customs clearance in his country. If necessary, our company can arrange goods delivery to the country of customer.
• Commission for VAT refund service - 30% of the amount of VAT refunded by tax authorities after export to the account of our Chinese export company. Overhead costs (postage to your country, commission of a customs broker, other certificates requested by customer) are not included. VAT refund services include following:
  • control of Chinese supplier's inward VAT invoice filling process (supplier should first provide draft of invoice to us);
  • preparation of documents package for VAT refund (request of original of customs declaration, request of VAT invoice from supplier, preparing of export invoice, export contract, filling of different tax forms regarding VAT refund, etc);
  • contacting with VAT department of tax authorities during whole process.

Rates of VAT refund in China:

Rate of refunded VAT depends on goods customs code - for different goods there are different VAT refund rates in China. For example, rate of VAT refund of equipment usually 17%. That means that in the case with equipment you can refund through our Chinese export company 100% of inward VAT (the VAT that was included in the invoice issued by Chinese supplier), except of our commission (see below). For clothes - rate of VAT refund in China is usually 16%, and for shoes - it usually is 15%.

As you can remember inward VAT rate under invoice issued by Chinese supplier to our China export company was 17%, so after export of shoes 2% is left to China state and 15% could be refunded.

Period of VAT refund in China (Guangzhou):

Whole process of the VAT refund in China usually takes several months (around 2 to 3 months after export in Guangdong, Guangzhou).