For the purpose of making the structural adjustment on the current export VAT rebate rates, the Ministry of Finance and the State Administration of Taxation publicized the circular on adjusting the export rebate rates ("The Circular") on Oct 10, 2003. In accordance with the provisions of The Circular, the main adjustments and changes of the current export VAT rebate rates include:

The export rebate rates of products listed below shall remain unchanged:
1) Agricultural products subject to current export rebate rates of 5% and 13%;
2) Industrial products subject to current rebate rate of 13%, and produced with agricultural products as raw materials (excluding those whose export VAT rebate rates shall be adjusted as provided in The Circular);
3) Goods subject to 17% VAT as provided by the existing taxation policy and export rebate rate of 13% (excluding those whose export VAT rebate rates shall be adjust as set forth in The Circular);
4) Goods subject to current export rebate rate of 17% including vessels, automobiles and their key spare parts and components, aerospace vehicles, digital controlled machine tools, processing centers, printing circuits, railway locomotives, etc.

The export rebate rate of wheat flour, corn flour, duck cuts, rabbit cuts and other goods shall be raised from 5% to 13%.

The export rebate policy shall be abolished of crude oil, timber, paper pulp, goat cashmere, eel fry, thulium ore, phosphorite, natural graphite and so on. For export goods subject to consumption tax, the consumption tax refund (exemption) policy shall also be abolished.

The export rebate rates for goods listed below shall be lowered:
1) The export rebate rate for gasoline (commodity code 27101110), non-rolled zinc (commodity code 7901) shall be lowered to 11%;
2) The export rebate rate of non-rolled aluminum, yellow phosphorus and other phosphorous, non-rolled nickel, ferrous alloy, molybdenum ore and concentrate and other goods listed in Annex 4 shall be lowered to 8%;
3) The export rebate rate of coke and semi-coke, coking coal, light and dead burnt magnesium, fluorspar, talc, steatite and other goods listed in Annex 5 shall be lowered to 5%;
4) With the exception of goods stated otherwise in The Circular, the export rebate rate of all goods subject to the current rates of 17% and 15% shall be lowered to 13%; and the export rebate rate of all goods subject to 13% of both current tax rate and rebate rate shall be lowered to 11%.

In addition, The Circular also makes some provisions on its enforcement as follows:

Export companies which shall export complete plant equipments (referring to those with export price of 2 million US dollars or above) and large electromechanical products (referring to those worth 1 million US dollars per unit) falling within Paragraph 4 of Article 4 after January 1, 2004 according to the export contracts signed before October 15, 2003, in which the prices of the goods are set unchangeable, shall get themselves registered and put on records at the local export rebate authority before November 15, 2003 by presenting the original and duplicated copies of the export contracts. After verification and examination, the Provincial State Taxation Bureaus concerned shall submit qualified export contracts and other relevant documents to the State Administration of Taxation no later than November 30, 2003. With the approval of the State Administration of Taxation in conjunction with the Ministry of Finance on the basis of their verification and examination, the local State Taxation Bureaus shall refund the tax in accordance with the export rebate rates prior to the adjustment. Complete plant equipment and large electromechanical products not registered and recorded before November 15, 2003 shall all be subject to the new export rebate rates.

　　As of January 1, 2004, all companies shall be subject to the export rebate rates set in The Circular for their goods exported in whatever modes of trade. The specific date of implementation shall accord with the date of departure indicated by the customs on the export goods declaration form.

-Alex Yang