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Beginning November 1, China will expand and optimize export tax rebates to lower costs for businesses and encourage trade, the State Council recently decided.
The move, announced on October 8, comes amid a protracted trade war with the US and signs of a slowing economy. Official data released on October 19 showed the Chinese economy growing by 6.5 percent in Q3 – the slowest rate since 2009, amid the global financial crisis.
Increased export tax rebates will help lower costs for China-based exporters, many of whom have been hit by US tariffs and significant economic uncertainty.
According to the State Council’s announcement, export tax rebates will be increased to 16 percent for goods that currently enjoy a 15 percent rate, as well as for certain ones that currently hold a 13 percent rate.
Goods that presently have a nine percent rate will be raised to either 10 or 13 percent, and goods at the five percent rate will be lifted to either six or 10 percent.
Some products, however, will remain at their current rates. These include high energy consumption and seriously polluting goods, and goods involved in industrial capacity cuts – products that could hamper the government’s campaign to crackdown on pollution.
In addition to lifting export tax rebate rates, the State Council said that the system for managing and applying for rebates will be simplified. There will now be five different rebate brackets instead of seven, and the government aims for the average handling time for applications to be reduced from 13 working days to 10.
Further to this, on October 15 the State Administration of Taxation released a directive to promote the acceleration and streamlining of export tax rebates.
According to the announcement, authorities will simplify the evaluation criteria for management categories, fully implement the paperless online processing of tax rebates, and carry out other measures to promote trade and the use of export tax rebates.
While the expedited time frame for processing export tax rebates is a relatively minor change, it is still a welcome development for businesses. In total, it often takes two to three months for businesses to claim the rebate from when the application is submitted.
More importantly, China-based exporters will be able to reduce their costs at a time many are facing US tariffs and economic uncertainty.
As the trade war with the US deepens and the Chinese government seeks to restore confidence in the economy, more measures to alleviate costs for businesses may be in the cards.
The Chinese government has already taken a number of steps to bolster its economy, including measures targeted at assisting exporters. In September, the government increased export tax rebates for 397 products to help offset US tariffs.
Besides export tax rebates, China has lowered costs for consumers and businesses via tariff and tax cuts, has sought new trade partners, and introduced regional incentives and improvements to the country’s business environment to attract investment.