Exemption and Refund

Exemption and Refund (免退税) is a method under China's export tax refund policy. It means that exported goods are exempt from VAT and consumption tax, and the VAT and consumption tax already paid in the domestic production and circulation stages are refunded. It mainly applies to foreign trade enterprises (with import and export rights) exporting goods, and production enterprises exporting non-self-produced goods, etc. Usage scenarios: Foreign trade enterprises generally apply the 'Exemption and Refund' method, i.e., exemption at the export stage, and refund of domestic input tax calculated based on the amount on the special VAT invoice for purchased goods. Notes: Declaration must be made within the prescribed time limit, with complete documents (customs declaration form, invoice, foreign exchange receipt, etc.); the refund rate may be lower than the levy rate, and the difference cannot be credited; the difference from 'Exemption, Credit and Refund' is that the latter applies to production enterprises, and the export refund is offset against the domestic tax payable. Difference from 'Exemption': Exemption only exempts tax at the export stage and does not refund input tax; Exemption and Refund simultaneously refunds input tax. Difference from 'Zero Rate': Zero Rate not only exempts tax at the export stage but also fully refunds input tax, whereas Exemption and Refund may not be able to fully refund due to the refund rate limit.