VAT Refunds for China-based Manufacturers Contracting Overseas

Oct. 21 – The State Administration of Tax has issued Guoshuihan (2009) 538 to its subordinate tax bureau concerning treatment of export VAT refunds (exemptions) on overseas contracted projects carried out by manufacturing enterprises.

According to the circular, a manufacturing enterprise with general VAT payer status exporting goods of its offshore contracted projects is entitled to the following treatments:

The “exempt, offset & refund” policy shall apply on both self-produced goods and non-self produced goods, provided that such goods qualify for tax preference under current regulations and that the export transaction is recorded as sales for accounting purposes
VAT will be levied if the goods are specifically disallowed for VAT exemption (refund) under current regulations

Exports of other goods, including personal effects, will be given VAT exemption