A preliminary survey indicates that mechanical and electrical products have been granted the most full export tax rebates according to a report by "China Taxation News." Industry insiders believe that a full export tax rebate should be implemented for most products.
There are 2,500 types of mechanical and electrical products with tax ID numbers, and 1,771 or 70 percent of which have been granted a full export tax rebate.
A full export tax rebate refers to the refunding of value-added tax on the export products to the corresponding export enterprises. The export tax rebate is a neutral trade policy commonly adopted in international trade to avoid double taxation according to relevant officials.
"During the financial crisis in Asia 10 years ago, China adjusted export tax rebate rates to the top level for all except 'high-polluting, high-energy-consuming and resource-dependent' products," an official from the China Chamber of Commerce for Import and Export of Machinery and Electronic Products said. He added, "At present the export situation is worse than 10 years ago, so those measures should be adopted again. Export tax rebate rates should be raised, and the taxes imposed on most products should be refunded to enterprises as much as possible."
Mechanical and electrical products have accounted for nearly 50 percent of all China's exported goods for a long time. In the first five months of 2009, China exported 250.53 billion USD of mechanical and electrical products, accounting for 58.79 percent of all goods exported. Exports of mechanical and electrical products have been hit hardest in the general drop in exports caused by the international financial crisis. In the first five months of last year, export volume increased by 26.1 percent year-on-year, however in the first five months of 2009, it decreased by 21.9 percent year-on-year.
It is understod that at present, profits generated by China's mechanical and electrical product export enterprises largely come from export tax rebates. A survey conducted by China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) on 200 major enterprises revealed that the key difficulties facing mechanical and electrical producers are shrinking international demand, significantly increased risk in client repayment and foreign exchange rates as well as a lack of working capital.
Following successive adjustments to export tax rebate rates, the comprehensive export tax rebate covers 1,971 of China's 13,000 types of export goods with tax ID numbers. China's existing comprehensive tax rebate rate has risen to 13.5 percent. In the first five months of 2009, the export tax rebate (exemption) reached 290 billion yuan, an increase of 23.4 percent year-on-year.
Against a backdrop of weakening foreign trade, China raised export tax rebate rates seven consecutive times between last August and June 1 this year. Over 8,000 tax ID numbers for export products have been involved. Five of the seven export tax rebate rate rises have covered mechanical and electrical products, involving 1,043 types of products with tax ID numbers.
In the first five months of 2009, China's export and import values totaled 763.49 billion USD, a decline of 24.7 percent year-on-year. Exports dropped by 21.8 percent and imports by 28 percent, according to statistics released by China's General Administration of Customs. In May, China's export and import values stood at 164.127 billion USD, a decrease of 25.9 percent year-on-year. Exports dropped by 26.4 percent and imports by 25.2 percent.
By People's Daily Online