Sept. 22 – Circular (2009) 84, which contains administrative measures for the “levy first and refund Later” mechanism for import taxes, was jointly issued last July by the Chinese Ministry of Finance, the People’s Bank of China, the General Administration of Customs and the State Administration of Taxation.

These measures cover the treatment of applicable customs duty, value-added tax, and consumption Tax and deal with the application and approval procedures, documentation requirements and the assignment of responsibilities amongst the four authorities above responsible for importation.

According to the measures, the local offices of China Customs are responsible for reviewing applications, while the final verification will be handled by the Ministry of Finance. The measures further stipulate that companies must apply for tax refunds within a 12-month period unless specific rules dictate otherwise. It is further stipulated that tax refunds provided shall be used for “prescribed” purposes or may be drawn back.

Companies requiring advice on obtaining VAT or import tax refunds in China should contact Sabrina Zhang, national tax partner for Dezan Shira & Associates in China, at tax@dezshira.com.