CHINESE
70% Machinery and Electronic Products were Granted Full Export Tax Rebate
 
07-14-2009
    Preliminary statistics show that full export tariff rebate has been realized to goods under 1,971 duty paragraphs among the total of more than 13,000 duty paragraphs for China's export products, thanks to the continuous raising of export tax rebate rate. Specifically, machinery and electronic products rank the first in terms of the amount of full export rebates. In the Customs tariff regulation catalogue, products under some 2,500 duty paragraphs fall in machinery and electronic product category, among which products under 1,771 duty paragraphs have realized full export rebate, accounting for roughly 70 percent of the total. Analysis points out that the overall tariff rebate rate of China has risen to 13.5%.
    Full export tax rebate refers to the full reimbursement of VAT levied on export products to export enterprises. Insiders say that the export tax rebate is a neutral trade policy. In international trade practice, tax rebate is normally imposed in full amount in order to avoid dual taxation and facilitate foreign trade.
    Statistics from the General Administration of Customs (GAC) show that the gross value of China's import and export reached USD763.49 billion for the first five months this year, representing a 24.7% decline as compared with that at the same period last year. Specifically, export decreased by 21.8%, and import decreased by 28%. The gross value of import and export reached USD164.127billion in May, a drop of 25.9% year-on-year. Specifically, export decreased by 26.4%, and import decreased by 25.2%. In the context that the foreign trade volume is on a constant decline, the country has further increased export tax rebate rate for some products since June 1 2009, which marks the 7th consecutive increase in export tax rebate rate since the latter half of last year. The duty paragraphs involved in the seven times of export tax rebate rate uplifting exceeds 8,000 (times). During the January-May period this year, China's export tax rebate (exemption) amounted to RMB290 billion, an increase of 23.4% year-on-year.
    The export of machinery and electronic products have long been a major contributor to China's export, which accounts for over 50 percent of the total. During the first five months of this year, the export of machinery and electronic products of China registered USD250.53 billion, accounting for 58.79% of the total export during the same period. In the midst of export decline caused by the global financial crisis, the export of machinery and electronic products received the hardest blow and plunged into a year-on-year decline of 21.9% from 26.1% growth registered in the January-May period last year…… Sources from the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) say: " During the Asian financial crisis occurred ten years ago, the central government raised export tax rebate rate for almost all products to the highest level except for the "highly energy consuming products, highly polluting products and resources-related products". Considering that the export situation is far more austere than that during the Asian financial crisis, similar approach should be adopted to raise the export tax rebate rate of most products to the extent that tariff collected is fully reimbursed to the exporters."
    It is learned that currently export tax rebate contributes to a great extent to the profits of machinery and electronic enterprises of China. A professional engaged in the export of machinery and electronic products of Jiangsu province says that profitability can be achieved only when the export tax rebate is provided in full amount to enterprises. Sources from the National Taxation Bureau of Hebei province say that the country has repeatedly raised the export tax rebate rate for labor-intensive products and high-tech products since last August, signaling a greater emphasis on bolstering the export of high value-added products. The move is of far-reaching importance for technology-intensive industries of Heibei province such as machinery and electronics, high-end steel manufacture in accelerating technological upgrade and optimizing product structure.
    A survey recently carried out by CCCME on 200 key enterprises indicates that the major difficulties faced by the machinery and electronic export enterprises are as follows in descending order of seriousness: declining demand on international market, marked increase in risk of payment by client, increased risk of exchange rate, shortage of liquid fund, etc. Statistics show that among the seven times of uplifting export tax rebate rate since last August, five times have involved machinery and electronic products, with commodities with duty paragraphs numbering 1043 (times) in total, which has played an important role in easing up the shortage of working capital of enterprises.
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