New Policy Support: No Output Tax is Required for The Return of Export Goods

New Policy Support: No Output Tax is Required for The Return of Export Goods

On February 1, the Ministry of Finance of the People's Republic of China, the General Administration of Customs and the State Administration of Taxation jointly announced that the goods (excluding food) that were declared for export under the customs supervision code (1210, 9610, 9710, 9810) of cross-border e-commerce within one year from the date of issuance of the announcement could be returned to the country in their original state within six months from the date of export due to unsalable and return reasons.

In recent years, with the gradual improvement of the cross-border e-commerce trade mechanism and the continuous dredging of the international logistics network, China's cross-border e-commerce channels have accelerated to expand, and more and more market entities have realized "buy the world and sell the world" through this channel.

According to industry insiders, some cross-border e-commerce exports may be unsalable or returned. Most of these goods are processed by enterprises overseas in the form of promotion, resale or destruction, but a small number of them still need to be returned to China.

The policy introduced this time aims to reduce the tax burden for these export returned goods. According to the Announcement on the Tax Policy for Export Returned Goods of Cross-border E-commerce issued by the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation, eligible returned goods can be exempted from import tariff, import value-added tax and consumption tax; The export tariff collected at the time of export is allowed to be refunded. The value-added tax and consumption tax collected at the time of export shall be subject to the relevant tax regulations on the return of domestic goods. The export tax refund handled by the enterprise shall be paid in a supplementary manner.

"According to the current regulations, except for the circumstances specified in Article 43 of the Regulations of the People's Republic of China on Import and Export Duties, import duties, import value-added tax and consumption tax shall be levied on the goods exported and returned into the country. The policies introduced this time are conducive to reducing the export return costs of cross-border e-commerce enterprises, stabilizing the export expectations of enterprises, and supporting the development of cross-border e-commerce, overseas warehouses and other new forms of foreign trade." Li Xuhong, director of the Institute of Finance and Tax Policy and Application of Beijing National Accounting Institute, said.

"This policy will save a lot of return costs for cross-border e-commerce export enterprises, reduce their worries, and inject confidence into the development of cross-border e-commerce industry," said Zhang Haoiri, founder and chairman of Hunan Zhimeitong Supply Chain Management Co., Ltd.

In terms of specific operations, according to the announcement, enterprises need to provide relevant supporting materials as required when applying for import tax exemption and other procedures. Illegal and illegal acts such as tax evasion and tax fraud shall be dealt with in accordance with relevant national laws and regulations.

"This policy will undoubtedly promote the better development of the cross-border e-commerce industry." According to Xu Guangjian, a professor at the School of Public Administration of Renmin University of China, promoting the implementation of the policy requires not only the coordination and cooperation of relevant departments, but also the cross-border e-commerce enterprises to operate in accordance with the law and enjoy tax preferences in strict accordance with the provisions of the policy.

In recent years, in order to actively support the development of cross-border e-commerce, the Ministry of Finance has issued a number of measures. In February 2022, the Ministry of Finance and other eight departments announced that from March 1, 2022, the list of cross-border e-commerce retail imports was optimized and adjusted, and 29 items of goods with strong consumer demand in recent years, such as ski equipment, were added. The new products were favored by consumers as soon as they were online. At the same time, some regulatory requirements in the list notes have been adjusted to better link up with relevant international conventions and import management measures, so as to facilitate the import of relevant commodities.

In Xu Guangjian's view, the policy of optimizing and adjusting the list of imported goods for cross-border e-commerce retail issued by the Ministry of Finance in conjunction with relevant departments, as well as the tax policy of returned goods for cross-border e-commerce export issued this time, fully considered the demands and interests of cross-border e-commerce enterprises, and promoted the improvement of China's import and export tax policy.