Laws of the People's Republic of China

State Administration of Taxation

Reply of the State Administration of Taxation on the Examination and Approval Purview Relating to Export Tax Refund or Exemption

Guo Shui Han[2006] No. 148

To the Bureau of State Taxation of Liaoning Province,

Your Request for Instructions about Transferring the Examination and Approval Power Relating to Export Tax Refund or Exemption to Lower Levels (Liao Guo Shui Fa [2005] No. 204) has been received. Upon deliberation, we hereby give a reply as follows:

I.

On the Examination and Approval Purview Relating to Tax Exemption, Offset and Refund for the Products Regarded as Self-made Products

As to the products that are regarded as self-made products and exported by production enterprises, the competent taxation authority shall carry out the tax exemption, offset and refund after verification in accordance with the relevant provisions in the Notice of the Ministry of Finance and the State Administration of Taxation on Further Promoting the Measures for Tax Exemption, Offset and Refund for Import and Export Goods (Cai Shui [2002] No.7) and the Notice of the State Administration of Taxation on Printing and Distributing the Operational Rules for the Administration of Tax Exemption, Offset and Refund for Goods Exported by Production Enterprises (for Trail Implementation) (Guo Shui Fa [2002] No.11) no matter whether the quantity thereof has exceeded 50% of the export amount of self-made products of the present month, and may not report them to the bureau of state taxation of the province, autonomous region or municipality directly under the Central Government for examination and approval.

II.

On the Examination and Approval Purview Relating to the Tax Exemption, Offset and Refund for the Newly-established Production Enterprises

As prescribed by the Article 8 of the Notice of the State Administration of Taxation on Some Issues Concerning Tax Refund or Exemption for Export Goods (Guo Shui Fa [2003] No. 139), where a newly established enterprise, whose total domestic and overseas sales volume is 5 million Yuan or more, and whose overseas sales volume accounts for 50% or more of its total sales volume, really faces difficulty in handling the tax refund within 12 months as of the date of its establishment, the tax exemption, deduction or refund thereof may be uniformly and monthly calculated on the basis of strict control and upon the approval of the bureau of state taxation of the province, autonomous region or municipality directly under the Central Government. We consider that these provisions would strengthen the administration and would not add a very large workload to the bureau of state taxation of the province, autonomous region or municipality directly under the Central Government, therefore, we do not agree to transfer the examination and approval purview relating to the tax exemption, offset and refund for the newly established production enterprises according to the aforesaid provisions to the bureau of state taxation at the level of city or prefecture.

III.

On the Examination and Approval Purview Relating to Whether the Verification and Writing-off Forms of Export Proceeds of Foreign Exchange Shall Be Provided

As prescribed by the Article 3 of the Supplementary Notice of the State Administration of Taxation on Relevant Issues Concerning the Administration of Tax Refund or Exemption of Export Goods (Guo Shui Fa [2004] No.113) , for any export enterprise that is newly established due to reorganization, restructuring, and merger or division and that re-handles registration on export tax refund or exemption, it need not provide the verification and writing-off form of export proceeds of foreign exchange when declaring tax refund or exemption upon the approval of the provincial taxation authority, and the subsequent examination may be adopted in accordance with No. 64 [2004] Document of the State Administration of Taxation if the original export enterprise is not under any circumstance as mentioned in Guo Shui Fa [2004] No. 64. These provisions are good for strengthening the administration, therefore, we do not agree to transfer the examination and approval purview relating to the non-providing of verification and writing-off forms of export proceeds of foreign exchange to the bureau of state taxation at the level of city or prefecture.

State Administration of Taxation

February 13, 2006