Laws of the People's Republic of China

Circular of the State Administration of Taxation on Related Matters Concerning Offset of the Input Amount of VAT Tax on Goods Imported by Taxpayers

Guo Shui Han [2007] No. 350

The Bureaus of state taxation in each province, autonomous region, municipality directly under the Central Government, and city specifically designated in the state plan:

Recently we received a question from some areas: whether or not the money returned or refunded by an overseas supplier to a domestic importer or the difference occurs because the actual payment for any imported goods is lower than the declared import price should be transferred out as an import tax amount after the taxpayer declares the import goods. The related matters are hereby specified as follows:

It is provided in Article 8 of the Interim Regulation of the People's Republic of China on Value Added Tax that the value added tax (VAT) on the tax payment voucher obtained by a taxpayer from the customs office may be credited against the output tax amount. Therefore, the tax payment voucher a taxpayer acquires from the customs for its imported goods is the unique proof of the computation of the VAT input tax amount, and the price difference as well as the money returned or refunded by an overseas supplier may not be transferred out as input tax amount.

Where a taxpayer has transferred out the aforesaid money or price difference as input tax amount before the announcement of this Circular, it may be re-included under the item of "Payable tax - Payable VAT - Input Tax Amount" and be credited against output tax amount.

The State Administration of Taxation

March 22, 2007