Shortly after the Chinese Premier Wen
Jiabao called for immediate reform of the existing export tax
rebate system last weekend, the State Council released a circular
Monday, illustrating the details of tax rebate reform.
The main adjustments include:
-?A moderately lower tax rebate rate. Under the principle
of moderation, safety and feasibility, the adjustments should be
made considering the difference of export products. The rate for
these exports encouraged by government will be kept unchanged or
slightly cut, while that of common products will be moderately
lowered. The tax rebate of those restricted by government and some
resource-related products will be sharply cut, even cancelled.
- Strengthen the support from central finance. From 2003, the
increment of export value-added tax and consumption tax will be
firstly used for export tax rebate.
- Set up a new system which asks both central and local
governments to refund tax. From 2004, to take the actual tax rebate
volume in 2003 as the benchmark, central and local governments
respectively pay the 75 percent and 25 percent of the amount which
surpasses the benchmark.
- Push forward the reform of a foreign trade system, and adjust
the industrial structure of China's exports. Through the
improvement of related laws, government strives to boost the export
of manufacturing enterprises and give instructions to foreign trade
agents. Exporters also aim to lower costs of export products, and
further enhance their international competitive ability. Meanwhile,
they try to optimize the industrial structure of export products
and improve their earnings.
- Central government will refund all tax rebates it owes
exporters before the end of 2003, and shoulder local fiscal losses
caused by the former value-added tax system. From 2004, it also
will refund outstanding payments through interest subsidies.
The details of tax rebate rate are as follows:
I. The tax rebate rate of farm produce, now 5 percent or 13
percent, will remain unchanged.
II. For products like ships, automobiles and its key parts,
numerically controlled machine tools, combined machine tools,
hoisting machinery, mechanical lift equipment, construction and
mining machinery, program-controlled telephone, telegraph exchange,
optical telecommunication equipment, medical equipment, locomotive,
portable automatic data-processing machine, metallurgy equipment,
aerospace vehicle, printing circuit, their current tax rebate rate
of 17 percent will remain unchanged. The rates of some machines,
clothing and textiles will be lowered to 13 percent.
III. For products like steel, hardware, industrial chemicals,
plastic products, toys, shoes, watches, pottery, chemical fibers,
rubber products, sports products, leather, traveling products and
suitcases, their existing tax rebate rate, now 15 percent, will be
lowered to 13 percent.
IV. ?For products with 13 percent tax rebate rate, mainly
coal and fertilizer, the rate will be lowered to 11 percent.
V. Abolishment of the tax rebate policy on some resource-related
products, including concentrates, crude oil, logs, coniferous wood,
throwaway chopsticks, cork and cork related products, wood pulp,
cardboard, paper pulp, cashmere and eel fry. For these
above-mentioned products which have consuming tax imposed on them,
its rebate of consuming tax will also be cancelled.
VI. The tax rebate rate of some resource-related products will
be lowered to 8 or 5 percent. These products which enjoy 8 percent
tax rate include Aluminium, phosphorus, molybdenum, nickel and
ferroalloy, while these with 5 percent rate include copper, coking
coal and coke.
These adjustments will take effect as of January 1, 2004. More
details are available on the websites of the Ministry of Finance,
State Administration of Taxation and Ministry of Commerce.
(China.org.cn by Tang Fuchun October 17, 2003)