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CIRCULAR OF THE STATE COUNCIL ON LOWERING THE RATES OF TAX REFUND FOR EXPORT

    The state policy on tax refunds for export, having been implemented since
1985, has played a positive role in encouraging export trade, adding to
foreign exchange earnings and promoting the development of the national
economy. However, there are some problems existing at present, such as less
payment with more refund, and a refund scale extending beyond financial
burdens. With a view to giving consideration to both foreign trade
development and the financial situation, the State Council has decided to
lower the rates of tax refund for export. Relevant stipulations are hereby
notified as follows:

    1. With regard to export goods declared and leaving the country after
January 1, 1996 (inclusive), the refund sum shall be calculated at the
following rates:

    (1) For coal and agricultural products, the rate of tax refund for export
shall remain at 3 percent;

    (2) For industrial products processed with agricultural products as raw
materials and other goods on which a value-added tax is collected at the rate
of 13 percent, the rate of tax refund for export shall be lowered from 10
percent to 6 percent; and

    (3) For other goods on which a value-added tax is collected at the rate
of 17 percent, the rate of tax refund for export shall be lowered from 14
percent to 9 percent.

    2. Where any goods are exported prior to December 31, 1995 (inclusive)
but for which the relevant refund has not been settled before that date, the
refund sum shall be calculated at the original rates, and shall be carried
forward in the period after January 1, 1996. The refunds shall be conducted
in order of the dates of export after strict examination by the taxation
department.