Foreign-owned companies in China may be eligible for a China tax rebate without even knowing it!
In this post I'll describe the process of how to get a tax rebate in China...
What is a China tax rebate for companies?
Typically when we discuss a China tax rebate, we're referring to a rebate on certain taxes which have been paid, such as VAT. There are other types of tax that are paid to the government, such as corporation income tax and import taxes, and while it may also be possible to get rebates on these, VAT rebates are probably most common.
Once a rebate application is accepted, the company in question will have funds returned from the local authorities.
Which types of company may apply for a rebate?
It doesn't matter if you're running a WFOE in China, joint venture, or representative office - you will have the ability to apply for a tax rebate. Whether you will gain one or not depends on taxes paid, and for what they were paid for.
How to get a tax rebate in China?
This is the question.
Typically you will need to submit your business license and other documents, such as an export license, to the local tax authorities.
There will be several declaration forms to complete (all in Chinese), and many items of proof will be required, such as monthly financial declarations, and documents proving that taxable items are eligible for the payment of tax, or exempt.
Essentially, you will need to prove to the local tax authorities that you have paid tax on items, services, or exports which can be returned by them as a rebate.
If you're an exporter, it may be that the items you export are VAT exempt, or that they are given a preferential refund rate (you can see common tax refund rates here, but it is in Chinese).
If you're running a business in China it may be that business costs, like the purchasing or new equipment for a factory, could be fully or partly tax-refundable too.
You need to be able to:
- Know that you have either purchased or exported tax-refundable good or services
- Know the amount of tax rebate available on these (it is not always 100%, rather it may be a percentage of the tax paid)
- Provide multiple sources of documentary proof showing details of tax paid and finances in general
- Submit several declaration forms with the proof to the local tax authorities
Again, all of this will need to be in Chinese of course!
Think you may be eligible?
Click here to request a free consultation from us on gaining your tax rebate
How long does it take to get a rebate?
This varies from region to region, and depending on the tax rebate being applied for, but we typically find that it takes 3 to 6 months to get funds returned from the authorities.
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While China wants to encourage certain activities and industries by providing tax rebates, they will leave it up to you to apply for them. If you do not try and are eligible, you're leaving money on the table!
As you can see, it's quite a complex and time-consuming activity; albeit worthwhile if you're able to gain a generous rebate.
You will need a thorough knowledge of your businesses' tax affairs, which goods or services you purchase, import, or export that may be tax refundable, and how to make this application to your region's local tax authorities; not to mention fluent written Chinese.
> To learn more, read Hongda's page dedicated to gaining clients China tax rebates. <
Your turn...
Have you successfully applied for a tax rebate in China for your business? Where? Which tips or experiences could you share to help our community?
Alternatively, do you have any questions about gaining a tax rebate for your company?
Why not speak to us and get a free 'no-strings' tax rebate consultation, where we'll look at your situation and see if you're eligible for a tax rebate. We can even submit the application for you and gain the rebate. Just click the button below:
