Laws of the People's Republic of China

The State Administration of Taxation

Circular of the State Administration of Taxation on Tax Refund for the Export Products Regarded as Self-made Products

GuoShuiHan [2002] No.1170

December 17, 2002

The state tax bureaus of the provinces, autonomous regions, municipalities directly under the Central Government and municipalities separately listed on the State plan:

Since the distribution of the Circular of the State Administration of Taxation on Several Issues Concerning Export Goods (GuoShuiFa [2000] No.165), you have had different understandings in the actual implementation with respect to the 4 kinds of products, purchased by the manufacturing enterprises for export purpose, that are regarded as self-made products for which tax refund is allowed. For the sake of correctly executing the policy on export tax refund, we hereby, after deliberation, give our notice as follows concerning the clarification of the 4 kinds of export products that are regarded as self-made products of the manufacturing enterprises:

1.

If the products purchased by a manufacturing enterprise meet the following conditions at the same time, tax may be refunded for them as for self-made products.

1)

Having the same name and functions as those of the products manufactured by the enterprise;

2)

Using the registered trademark of the enterprise or the trademark provided by the foreign merchant to the enterprise;

3)

To be exported to the foreign merchant that imports the self-made products of the enterprise.

2.

Where a manufacturing enterprise purchases the products that are affiliated to the export products it manufactures, if the purchased products are exported to the foreign merchant that imports the self-made products of the enterprise and meet one of the following conditions, tax may be refunded for them as for self-made products.

1)

Tools, spare parts and replacements used to maintain the self-made products exported by the enterprise;

2)

Those that can, without processing or assembling by the enterprise, combine with the self-made products of the enterprise to form full sets of products after export.

3.

For any enterprise meeting the following conditions at the same time, the tax department in charge of export tax refund may recognize it as a group member, where the group corporation (or head factory, hereinafter the same) purchases the products of its member enterprises (or sub-factories, hereinafter the same), tax may be refunded or exempted for those products as for self-made products.

1)

An enterprise approved by the governmental authority at the county level or above to be the member of a group corporation, or a manufacturing enterprise in which a group corporation holds the controlling position;

2)

The group corporation and its member enterprises all execute the financial and accounting system of manufacturing enterprise;

3)

The group corporation must submit certifications of the relevant member enterprises to the tax department in charge of tax refund.

4.

If the products are commissioned to others for processing and taken back by the manufacturing enterprise, and meet the following conditions at the same time, tax may be refunded for them as for self-made products.

1)

They must have the same name and functions as those of the products manufactured by the enterprise, or be the products manufactured by the enterprise and commissioned to others for further processing;

2)

To be exported to the foreign merchant that imports the self-made products of the enterprise;

3)

The commissioner executes the financial and accounting system of manufacturing enterprise;

4)

The party who commissions and the party who is commissioned must sign the agreement on the commissioned processing. The main raw materials must be supplied by the party who commissions. The party who is commissioned shall not advance any capital, but only take charges for the processing, and shall issue the special value-added tax invoices for the processing charges (including the auxiliary materials advanced).

5.

The refundable proportion, calculation method of refund, and the vouchers needed etc of the above mentioned purchased products shall comply with the Circular of the State Administration of Taxation on Clarifying the Measures for Tax Exemption, Setoff and Refund for Export of Products Regarded as Self-made Products by Manufacturing Enterprises (GuoShuiFa [2002] No.152).