The State Administration of Taxation ("SAT") has recently issued the Announcement on Export Tax Refund (Exemption) Issues Concerning Unifying the Criteria for Small-scale Taxpayers (the "Announcement"), with effect from May 1, 2018.
The Announcement provides clarity on a series of issues, including how to handle tax refund (exemption) matters for export business before a general taxpayer switches its status into a small-scale taxpayer, how to deal with the input tax that has not been declared and offset yet and the period-end overpaid VAT for offsetting the future tax payable by a taxpayer switching itself from a general taxpayer into a small-scale one, how to ascertain the input tax that has not been declared and offset yet, how to adjust the item "tax and fees payable – input tax to be credited", how to update the record filed for export tax refund (exemption), and how to register as a general taxpayer again after a taxpayer has switched its status from a general one into a small-scale one. According to the Announcement, for goods and labor services, subject to VAT refund (exemption) policies, exported by the taxpayer, and taxable activities subject to zero VAT rate, when a taxpayer was a general one, the taxpayer that has switched itself into a small-scale one shall still apply for export tax refund (exemption) and handle matters in this regard in accordance with existing rules.