Tax-free tax rebates for production export enterprises

For trade - oriented export enterprises, such as foreign trade companies, its way of tax refund is the levy first. Namely when foreign trade company buys goods from the factory, the country first collected input value added tax. When the goods are exported by the foreign trade company, they are returned to the foreign trade company by means of tax refund. So, for production-oriented export enterprises, what is its tax rebate?



Since the production-oriented enterprise has domestic sales, it can sell the goods to the foreign trade company. Therefore, some domestic sales taxes and fees need to be paid for domestic sales. In fact, the export of goods by production-oriented enterprises is a tax rebate method that is exempt from tax rebates.

Next, let's take a look at the tax rebate methods for production enterprises' export tax exemption, tax credit and tax refund. How to understand it?

Tax Exemption, Tax Credit and Tax refund
First of all, "exemption" tax refers to the exemption of value-added tax on production and sales of self-produced goods exported by production enterprises or entrusted by foreign trade enterprises.

For a self-operated export of a production-oriented enterprise, the products produced are sold to foreign importers. In such a production and sales activity, in essence, if there is no international trade span, VAT for export sales will be levied. Because it is exported to another country, the VAT of this part of sales generated by the sale is borne by the final consumer. The final consumer is in the importing country, in fact, the VAT of this part of the output should be collected by the importing country. Due to WTO regulations, basically, the governments of exporting countries are exempt from VAT on export sales.

Next, the “tax credit” refers to the self-produced goods exported by the manufacturing enterprise or the foreign trade enterprise commissioned by the agent, and shall be exempted or refunded the input tax amount of the purchased goods consumed, and deduct the tax payable on the domestically sold goods.

After the production-oriented enterprises export themselves, the state will refund the tax to the enterprises to subsidize the value-added tax of the input portion of the enterprises; at the same time, the production-oriented enterprises will also have domestic sales, which need to pay the output VAT. For the taxation department, the "one levy one collection" work is too cumbersome, so there is a method of deduction. To put it simply, it means that the domestic sales tax payable by the enterprise and the advance input tax refundable are offset by each other. The part that has not been offset is then pushed to the enterprise by the state.

Finally, the "rebate" tax refers to the export of self-produced goods by the production enterprise or the commission of a foreign trade enterprise to export the self-produced goods. If the tax deductible is greater than the taxable amount within the month and is not deducted, the tax refund authority shall approve the tax deducted will be refunded.

Our country has exempted VAT from the export sales of enterprises, that is to say, the export price of the enterprise does not include sales value added tax. Then, when an enterprise purchases raw materials, the input VAT paid in advance cannot be recovered. Therefore, the state has set up a tax rebate policy to refund this part of the input VAT to the enterprise. That is to say, if the enterprise's tax refund is greater than the tax payable, the government will refund the value-added tax to the enterprise; on the contrary, if the tax refund is less than the domestic sales tax, the government will continue to collect the value-added tax on the output.

One thing to note is that tax rebates can’t exempt and deduct tax. What does this mean?

Tax-free tax refunds can’t exempt and deduct tax.
The domestic value-added tax of our products is generally 17%.
 After the product is exported, the input tax corresponding to the materials actually consumed by the exported goods is different. When the state rebates are made, not all products are returned to you at a 17% rebate rate, including 11%, 13% and so on. So if your product rebate rate is 13%, there is a 4% difference between the government's 17% VAT and the 13% rebate. The vat paid for this part of the difference, in the tax law is called the tax credit tax rebate is not exempt and deductible tax.

In fact, the aforementioned exemption of value-added tax on export goods is mentioned above. This "exempt" tax does not mean zero taxation, but a low collection rate. This part of the difference in value-added tax will not be returned to you by the state, and it will be borne by the exporting company to become the cost of the enterprise.