Laws of the People's Republic of China

Circular of the State Administration of Taxation on Carrying out the Pilot Work on Transferring the Examination and Approval Power concerning the Tax Refund (Exemption) on Exported Goods to Lower Levels

Guo Shui Han [2006] No.502

The state taxation bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan,

With a view to optimizing the export tax refund service and further strengthening the connection between tax collection and tax refund, the State Administration of Taxation, upon study, decides to implement the pilot work on transferring the examination and approval power concerning the tax refund (exemption) on exported goods to lower levels, and hereby notifies the relevant issues as follows:

I.

Definition of and Qualifications for the Transfer of Examination and Approval Power to Lower Levels

The "transfer of examination and approval power concerning tax refund (exemption) on exported goods to lower levels" refers to the transfer of the examination and approval power concerning tax refund (exemption) on exported goods to the taxation organs at the level of county (district, banner and county-level city, similarly hereinafter) from the taxation organs at or above the level of districted city or autonomous prefecture (hereinafter referred to as the municipal taxation organ). The qualifications for the transfer shall be that the amount of export tax refund (exemption) of the taxation organ at the county level has reached a certain scale, the taxation organ has established a special management institution for export tax refund or arranged full-time managers for export tax refund and the post configuration meets the requirements for supervision and restriction.

II.

Pilot Scope

1.

The pilot scope for the transfer of examination and approval power concerning production enterprises to lower levels

a.

Zhejiang Province and Jiangsu Province are the pilot provinces. Except few unqualified cities of the pilot provinces, all other cities shall be generally incorporated into the pilot scope, and the specific scope for the transfer of examination and approval power concerning the tax refund (exemption) on exported goods of production enterprises to lower levels shall be determined by the state taxation bureau at the provincial level.

b.

With a view to accumulating experience and doing a good job in the following promotion work, other provinces (provinces and autonomous regions, similarly hereinafter) may, in light of their respective actual situations, choose one or two cities for the pilot transfer of examination and approval power on production enterprises to lower levels. And some unqualified provinces may not carry out the pilot work for the time being.

c.

Any county, to which the examination and approval power has been transferred, shall establish a special management institution for export tax refund or arrange two or more full-time managers for export tax refund.

Where any county within the jurisdiction of a pilot city cannot meet the said qualifications, the foresaid examination and approval power shall still be exercised by the municipal taxation authority.

2.

The pilot scope for the transfer of examination and approval power concerning foreign trade enterprises to lower levels

(1) Zhejiang, Jiangsu, Guangdong and Shandong Provinces may choose one or two counties that can simultaneously meet the following qualifications for the transfer of examination and approval power concerning the export tax refund to foreign trade enterprises to lower levels.

a.

There are ten or more foreign trade enterprises within the jurisdiction;

b.

The annual export amount of its subordinate foreign trade enterprises is up to 100 million US Dollars or more; and

c.

A special export tax refund management institution has been established and has five or more full-time persons for export tax refund management.

(2) Other provinces may not carry out the pilot transfer of examination and approval power concerning foreign trade enterprises to lower levels for the time being.

3.

All the municipalities directly under the Central Government and the cities under separate state planning shall not carry out the pilot transfer of examination and approval power to lower levels for the time being.

III.

Requirements for the Pilot Work

1.

After the transfer of the examination and approval power to lower levels, the management power for tax exemption, deduction and transfer shall still be in the charge of the taxation organ of municipal level, and the planned management of tax exemption, deduction and transfer shall also be strengthened.

2.

The pilot work shall be conducted in light of the specific situations. Where the personnel, their qualities and other aspects do not meet the requirements, the pilot work shall not be conducted.

3.

After the transfer of the examination and approval power to lower levels, all the regions shall, in light of the actual situations of their respective regions, further specify the duties concerning the export tax refund management at the levels of province, municipality and county, and formulate corresponding management rules on export tax refund.

IV.

All regions shall attach great importance to the pilot work on the transfer of examination and approval power concerning the tax refund (exemption) on exported goods to lower levels. And the leaders of local bureaus who are in charge of export tax refund shall take command in person, strengthen the internal coordination, formulate practical and feasible pilot projects, and timely report the problems they encounter, their opinions and suggestion to the upper levels.

V.

All regions shall, before June 10, 2006, report their pilot project to the State Administration of Taxation (the Department of Import and Export Taxes) by formal documents, and begin to conduct the pilot work as of July 1, 2006.

State Administration of Taxation

May 29, 2006