Tax Policies on Export Enterprises

I.             Streamlined Procedures for Reviewing, Approving and Inspecting Export Tax Refund

1.              Settlement of Export Tax Refund Abolished

From January 1, 2006, for goods exported by an export enterprise during the previous year, t he State Taxation Bureau (hereinafter referred to as the tax authority) in charge of tax refund (or exemption) no longer conduct s settlement of tax refund ( or exemption) of exported goods .

--    Circular of the State Administration of Taxation on Abolishing the Settlement of Tax Refund ( or Exemption) for Exported Goods (SAT Circular [2005] No. 197 ).

2.       For products exported by manufacturers and treated as self-made products, regardless of whether such products exceed 50% of the monthly volume of exports of self-made products, the competent tax authority shall exempt, offset or refund taxes according to the relevant provisions after verification, and no approval is required from the national taxation bureau of the province, autonomous region, municipality directly under the Central Government, or the city with independent economic planning.

--    Reply of the State Administration of Taxation to Questions on the Scope of Authority Regarding Review and Approval of Export Tax Refund (and Exemption) (SAT [2006] No. 148)

3.       Paperless Management for Foreign Exchange Management and Control Forms

From January 1, 2007, for cargos declared by export enterprises in Xiamen for export, paper-based Foreign Exchange Management and Control Form s or Export Foreign Exchange Collection Management and Control Forms are no longer required. With the implementation of paperless Foreign Exchange Collection Management and Control Forms, the regulation that export enterprises shall submit paper-based Management and Control Form s to tax authorities within 180 days of export declaration is no longer applicable.

--     Circular of SAT Xiamen Municipal Office and SAFE Municipal Branch Regarding the Trial Exemption of Provision of Paper-based Export Foreign Exchange Collection Management and Control Forms (SAT Xiamen [2007] No. 13)

II.     Policies on Export Tax Refund for Special Regions

On August 16, 2004, the logistics park, covering an area of 0.7 square kilometers in Xiamen Xiangyu Bonded Area and approved by the State Council, commenced trial joint operations. In March 2006, the fist phase of the project, covering an area of 0.26 square kilometers, passed its final inspection and officially started operations. The bonded logistics park focuses on providing four major functions: international transit, international forwarding, international sourcing, and international entrepot trade.

The park is entitled to related policies for bonded areas. In terms of import and export taxes, the relevant policies applicable to export processing zones are referenced and implemented for the park. Domestic cargos entering the park for export are exempted from tax. Customs declaration procedures for cargo import are implemented for cargos in the park intended for domestic sales; cargos are taxed according to the actual status; cargo are free to circulate within the park and no consumption tax on VAT is levied.

--      Reply of the General Office of the State Council Regarding the Expansion of Trial Joint Operations between the Bonded Area and the Port Area (GOSC [2004] No. 58)