The Chinese VAT refund up to 16%

Ministry of Finance and State Administration of Taxation of China announced on  March, 30 (Source: website ) a forth raise of China’s export tax rebate, increasing the tax rebate of most textile and apparel products to 16%  starting from 1st April 2009.

The previous three announcements were: August 2008 from 11% to 13%, November 2008 from 13% to 14%, and February 2009 from 14% to 15%.

This measure covers the same scope of products compared to the coverage of the previous announcement, meaning that 9 out of 14 chapters relevant to textiles and clothing are fully covered by this measure, together with the majority of products of the rest of the chapters

The Chinese government explains that this increase is an important measure in implementing the structural taxation reduction policy of China. Its objective is three-fold: 1) stabilise export to face the challenges of decline of international demand due to the financial crisis; 2) securing domestic employment; 3) facilitate industrial restructuring as it gives companies more self-use capital which can be used for technological renovation.

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