Laws of the People's Republic of China

Circular of the State Administration of Taxation on Enhancing the Administration of Tax Refund for the Export Goods Made of Agricultural Products as Main Materials

Guo Shui Han [2006] No. 685

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

Recently, it is found in some cases of tax fraud investigated and dealt with by the taxation departments that some law-breakers and illegal enterprises cheat of tax refunds by using export goods made of agricultural products (especially some agricultural products that are small, light and of high value, and with distinct differences between the unit prices of different grades) as the main raw materials, in order to strengthen the administration of tax refund for the export goods, severely prevent the incidence of tax fraud cases, the relevant matters are hereby notified as follows:

1.

The taxation departments in all localities shall attach great importance to the administration of the tax collection and tax refund on export goods made of agricultural products as raw materials and shall adopt effective measures to sternly prevent the incidence of the cases of tax dodge and tax fraud.

2.

The taxation departments in all localities shall enhance the early warning, evaluation and analysis work for the tax refund for the export goods made of agricultural products as raw materials. In case of any abnormal increase of export volume or export price, or any other clue of tax fraud, it must report the abnormalities to the State Administration of Taxation immediately, apart from disposing the case according to the existing provisions.

3.

In the daily work, the taxation departments in all localities shall improve the examination and approval of the tax refund (exemption) for the export goods made of agricultural products as main raw materials. At the same time, where the competent taxation authorities find any abnormal increase of export volume or export price in the early warning, evaluation and analysis work with regard to the tax refund for the export goods made of agricultural products as main raw materials, such as leather, fur, cashmere, pearl, rare Chinese Traditional Medicine, or top-grade aquatic products which are small, light and of high value, and there are distinct differences between the unit prices of the different grades, if the production enterprise exports the products by itself or entrusts any other person to export the products, the competent taxation authorities shall carry out spot inspection to the place, equipment, production capacity, production scale, varieties of products, volume of production and tax payment information of the production enterprise and shall cautiously examine the relevant items, warehousing entry, flow of fund, output rate, etc. in the invoices for the purchase of agricultural products. As to the export goods purchased by a foreign trade enterprise, the competent taxation authorities shall, issue investigation letters to the taxation departments at the county level or above where the supply enterprises are located in accordance with the existing letter-based investigation into the taxation concerning the exported goods, and shall deal with it subject to the replies. The taxation departments at all levels shall confirm the information and make replies as soon as possible after they receive any investigation letter.

4.

The agricultural products that are small, light and of high value, and with distinct differences between the unit prices of different grades (or specifications) are not confined to the scope as listed in Article 3 of this Circular. In the practical work of examination and approval of tax refunds, the taxation departments in all localities may conclude the concrete scope of export goods processed with agricultural products that are small, light and of high value, and with distinct differences between the unit prices of different grades (or specifications), as raw materials.

The State Administration of Taxation

July 12, 2006