Administrative Measures on Tax Refund (Exemption) for Ports of Departure

In accordance with the Notice of the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation on the Trial Implementation of the Tax Refund Policy for Ports of Departure (Hereinafter refers to “POD”) in Shanghai (CaiShui (2012) No. 14) and in light of the existing administrative measures for value-added tax (hereinafter referred to “VAT”) and consumption tax on exported goods and services and other relevant provisions, the Administrative Measures for Tax Refund (Exemption) at Ports of Departure have been formulated and are hereby issued:

(1) An export enterprise to which the tax refund (exemption) policy for ports of departure applies shall meet all of the following requirements:

– The export enterprise is a general VAT taxpayer that exports goods for
its own account and is qualified for export tax refund (exemption).
– The export enterprise is deemed to have a Grade B or a higher grade of
customs administration (according to the electronic customs declaration
form for exported goods showing the “POD” sign as provided by customs).
– The export enterprise is not classified as an Alert Grade 1, 2 or 3
Enterprise by the tax authorities in the alert information for the
examination of export tax refund.

(2) The document preparation for tax refund (exemption) of ports of departure for export enterprises can to be automatically confirmed by the export tax refund examination system.

(3) The local tax authorities will strengthen the review work for the tax refund (exemption) for ports of departure, and a manual checking is used to review abnormal data based on the results of an automatic review and comparison according to the following principles:

1) Where items such as quantity, unit, total price etc. are different
from the normal customs declaration, the refund tax amount can be
adjusted according to normal customs declaration data. In case that a
customs declaration application form is revoked or amounts were not
received, the tax refund (exemption) obtained in accordance with the
prevailing regulation has to be returned or the data should be
adjusted.
2) Data which are neither declared to customs nor written off within two
months from the date of departure or which are overdue to be declared
to customs, the tax refund (exemption) obtained has to be returned or
the data have to be adjusted in accordance with the prevailing
regulation. At the same time, the export enterprise cannot enjoy tax
refund policies for ports of departure.

For overdue amounts which become normal after declaration and write-off by the customs according to the prevailing polices, the export enterprise can re-apply the tax refund with the tax refund certificate issued by the customs of the departure port. The authorized export tax refund bureau can process the tax refund based on the normal declaration data.

At the same time, the local tax authorities will promptly review the results of feedback of the export enterprise and check if the export enterprise pays back retroactively the tax refund (exemption) or adjusts the data declared in the next month VAT tax declaration period. If the export enterprise fails to repay the refund (exemption) or fails to adjust the report data, the local tax authorities will enforce the debt without delay.

(4) For cargo that is entitled to VAT exemption, the authorized tax bureau will process the tax exemption according to the normal declaration data.

(5) The tax refund rate for cargo that is entitled to tax refund and exemption policies is stipulated to be equivalent to the refund rate of the export date on the tax refund certificate issued by local customs.

Our understanding and suggestion

This administrative measure defines concrete operation instructions for export enterprises and tax authorities in the segments such as document preparation, customs declaration, verification, review and return cargo, etc. Please see the following summary for your reference:

(1) Document preparation for the export tax refund (exemption):Definition of requirements the export enterprise shall meet to apply for tax refund (exemption) for ports of departures; Documentation preparation for tax refund for ports of departure for the export enterprise is automatically processed by examination systems based on customs electronic information. Thus, the burden for enterprises will not be increased.

(2) Application for tax refund (exemption): the enterprise to which the tax refund policy applies should pay attention to the mark “POD” on electronic customs declaration forms and the foreign trade enterprise should declare separately in order to ease the handling.

(3) Verification of tax refund (exemption): The tax authorities receive four kinds of data for ports of departure: date of departure, normal declaration data, data not arrived and data about revocation of
declaration data. Purpose is to further verify, review and levy tax. The policy also defines that enterprises which fail to declare the tax to customs are not entitled to enjoy the tax refund policies for the ports of departure.

(4) Other: The export enterprise should apply for the Certificate of Payment for Overdue tax (not refunded tax) for Export Cargo issued by customs for the cargo return; for export cargo that is entitled to VAT exemption, the normal data should be used to conduct tax exemption.

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