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The Ministry of Finance
Letter of the Ministry of Finance on the Accounting Dealing with the Consumption Tax of the Export Dutiable Consumables
CaiKuaiSiZi [1994] No.4
March 2,1994
According to the Interim Regulations of Consumption Tax and Rules of Implementation for it and Concrete Provisions on Tax Refund of
the Export Goods, the export dutiable consumables of taxpayers can be exempted. There are two ways of exemption: direct duty-free
and granting refund after paid first.
The manufacturing enterprises export directly the export dutiable consumables can be granted direct duty-free. If goods are refused
by the customs or sent back after exporting, the enterprises need not pay the tax in arrears at that time with the approval of the
local taxation institution in charge and pay the consumption tax after the goods are transferred to be sold at home.
If the manufacture enterprises deal in the export dutiable consumables through the foreign trade enterprises, the tax should be paid
first and then refunded. It means that the manufacture enterprises pay the consumption tax and apply the tax institution for refund
after the foreign trade enterprises declare at the customs. The refund should be returned to the manufacture enterprises by the foreign
trade enterprises that deal in exporting the goods as an agent of the manufacture enterprises. The refund can be owned by the foreign
trade enterprises to which the manufacture enterprises sell the goods. If goods are refused by the custom or sent back after refund,
the foreign trade enterprises should apply promptly the local tax institutions in charge for paying the consumption tax that has
been refunded according to the related regulations. With regards to the enterprises dealing in exporting as the agent of the manufacture
enterprises, the tax should be paid by the manufacture enterprises.
The reason why tax is paid first and then refunded is that the consumption tax belongs to the tax category in the production field.
The consumption tax should not be levied on the goods that have come out of the field of production and entered into the field of
circulation. When the foreign trade enterprises by themselves or acting as the agent independently deal with exporting the goods
sold by the manufacture enterprises, it shows that the goods have been out of the production field. If the goods are sold at home
instead of exported, the foreign trade enterprises need not pay the consumption tax. Therefore that consumption tax of the goods
are paid by the manufacture enterprises while leaving the production field and refunded after exporting can strengthen the source
of tax and prevent the loss of taxes. If goods are refused by the custom or sent back after refund, the foreign trade enterprises
should apply the local taxation institution in charge for paying the consumption tax in time. If the dutiable consumer goods sent
back are exported again, refund can be applied after custom declaration. If hereinabove goods are sold at home, consumption tax should
not be levied any longer.
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