China Cuts VAT Tax Rebates to Curb Exports In June 2007, the Chine government announced that it would cut tax rebates on more than 2,800 export items starting July 1. Manufacturers importing products from China should familiarize themlves with the changes and how they are impacting costs for their Chine vendors. In China, suppliers pay a VAT of 17% on most products. Like most countries with a VAT tax structure, China rebates a portion of the VAT back to producers when goods are exported from the country. Until July 1st of this year, the VAT rebate was 8% to 17% on most exported items. After July 1, China is reducing the rebate to 0% to 11% on affected products. The include certain metal products, textiles, shoes, and other manufactured goods (e attached Ministry of Finance Circular). In total, the goods affected amount to about 37% of China’s exports. Why China is enacting a VAT reduction In the 12 months through May 2007, China’s trade surplus with the US alone equaled $217 billion. Due to mounting pressure from the U.S. and European Union, the Chine want to control the growth of this surplus by effectively raising taxes on items described as “easy to trigger trade friction”. Also, the Chine government says they want to restrict industries that u high amounts of energy, consume too many natural resources, or are highly polluting.kili
VAT Explained VAT or Value Added Tax is a tax paid by each firm in the supply-chain bad on the value they add to a given product. For example, if a firm sold an item for $1,000 and paid $750 for the
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materials that went into the product, the firm would pay VAT as a percentage of $250. Most developed countries u the indirect VAT system to collect taxes on goods and rvices. The United States is somewhat unusual in using a sales tax paid directly by the consumer at time of purcha.
U.S. TRADE BALANCE WITH CHINA
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Note - 2006 = January thru November Source: U.S. Census Bureau
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Effect of rebate reductions and a stronger Yuan on pricing For affected Chine suppliers, the impact of the VAT reductions is a cost increa of 2% to 8%. At the same time, the US dollar has been weakening steadily at about 4% a year against the RMB since September, 2005. The combined effect of the VAT Rebates on Select Categories measures is likely to be price increas of 6% to 12% Old Rate New Rate on affected products. Since Chine suppliers Plastic products 13% 5% frequently operate on thin margins, North American Stampings 13% 5% importers can expect attemp
giveprioritytots by their Chine Wood door parts 11% 5% suppliers to pass the costs along. Capital equipments 11% 9% Next steps We recommend determining the cost impact of the tax changes on your suppliers prior to price renegotiations. The attached circular is the most comprehensive information published by the Chine government in English. On the China Customs web page (v), urs can input the specific HTS code of their items and confirm the new rebate. Unfortunately, this tool is only available on the Mandarin language version of the page. Plea contact us if you would like our China team to do this for you. If your items are affected, now may be the right time to reconsider domestic sources or suppliers in other lower-cost countries such as Vietnam, Thailand, India, Malaysia, or Indonesia. About Transpac Access Transpac Access provides sourcing rvices to medium-sized manufacturing companies. Our team has sourced over $2 billion of materials and rvices, $1 billion from low cost countries. We u a powerful and proven approach to help our clients source globally while implementing state of the art sourcing technology. Visit us 教师节表彰大会讲话>新年快乐英语怎么写
June 19, 2007 Circular of Ministry of Finance and State Administration of Taxation on Adjusting Export Rebate Rate of Some Commodities Authorized by the State Council, here are adjusted export rebate rates of some commodities. Related issues are announced as follows: I. Dismantle export reb
初一课程ate rate of following commodities 1. animals and plants on the verge of extinction as well as related products; 2. mineral products such as salt, solvent oil, cement, liquefied propane, liquefied butane and liquefied petroleum gas; 3. fertilizer (carbamide and ammonium phosphate who rebated are dismantled already are excluded ); 4. chemical product such as chlorine and coloring matters (fine chemical product is excluded); 5. metal carbide and active carbon products; 6. leather; 7. a part of wood block and disposable wooden products; 8. plain carbon welded tubes products (petroleum double-pipe is excluded); 9. simple non-ferrous metal products such as non-alloy aluminum bars; 10. vesl ction and non-mechanized vesl. 11. Plea refer to appendix 1 for commodity name and tariff code. II. Deduct export rebate rate of the following commodities 1. deducting the export rebate rate of plant oil to 5 percent; 2. deducting the export rebate rate of a part of chemical products to 9 percent or 5 percent; 3. deducting the export rebate rate of plastics, rubber and their products to 5 percent; 4. deducting the export rebate rate of box and bags to 11 percent, the leather products to 5 percent; 5. deducting the export rebate rate of paper products to 5 percent; 6. deducting the export rebate rate of wearing apparel to 11 percent; 7. deducting the export rebate rate of shoes and hat, umbrella and feather products to 11 percent; 8. deducting the export rebate rate of some stone materials, pottery, glass, pearl, gem, noble metal and its products to 5 percent; 9. deducting the export rebate rate of a part of steel and products (excluding petroleum double pipe) to 5 percent. Th
e export rebate rate of the marine engineering construction of domestic trade stipulated in Circular of Ministry of Finance and General Administration of Customs on Rebate of VAT of Marine Engineering Construction (announcement No.46, 2003) shall stay unchanged; 10. deducting the export rebate rate of other ba metals as well as their products (excluding commodities with their export rebates already dismantled and aluminum foil, aluminum pipe and aluminum construction) to 5 percent; 11. deducting the export rebate rate of planer, slotting machine, cutting machine and broaching machine to 11 percent, diel engine, pump, fan, drain tap and its parts, revolving furnace, coke oven, Sartorius, stapler, snowmobile, motorcycle, bike, trailer, rir and its parts, tap and brazing machine to 9 percent; 12. deducting the export rebate rate of furniture to 11 percent or 9 percent; 13. deducting the export rebate rate of timekeeper, toy and other miscellaneous products to 11 percent; 14. deducting the export rebate rate of a part of wooden products to 5 percent; 15. deducting the export rebate rate of visco fiber to 5 percent. Plea refer to appendix 2 for commodity name and tariff code. III. The following commodities shall be exempted from tax peanut, canvas, carved board, stamp, and fiscal stamp. Plea refer to appendix 3 for commodity name and tariff code. IV. Time for implementation - The export rebate rate adjustment of above commodity shall take effect as from Jul 1, 2007. The specific time shall subject to the date of export on Declaration Form of Export Commodity (only for export rebate). Export enterpris, which sign export contract involving export r
ebate cancellation before Jul 1, 2007 and would take the export contract (both original and copy are required) to tax authorities in charge of export rebate to register before Jul 20, 2007, shall be permitted to follow the original export rebate rate. Tho failing to register before Jul 20, 2007 shall have the export rebate cancelled. The equipment and building materials, involved in the long term foreign contracted project won or long term contract of foreign contracted project signed before Jul 1, 2007 by export enterpris with foreign contacted project qualification, shall be permitted to follow the original export rebate rate when the related export enterpris take effective certification of bid winning (both original and copy are required) or contract of long term foreign contracted project (both original and copy are required) and budgetary estimate bill of the project to tax authorities in charge of export rebate to register before Jul 20, 2007. Tho failing to register before Jul 20, 2007 shall follow the adjusted export rebate rate. Ministry of Finance State Administration of Taxation Date: Jun 19, 2007
