China Clarifies Use of Special VAT Invoices for Export Tax Refunds

To clarify issues that occur when foreign-trade enterprises apply for export tax refunds using special value-added tax (VAT) invoices which have been approved as input VAT creditable, the State Administration of Taxation (SAT) promulgated the “Announcement on Issues Concerning Applying for Export Rebates by Foreign Trade Enterprises Using Special Value-added Tax Invoice (SAT Announcement [2012] No. 22, hereinafter referred to as ‘Announcement’).” The Announcement specifies that foreign-trade enterprises can use special VAT invoices which have been approved as input VAT creditable to apply for export VAT. It further clarifies the appropriate treatment of special VAT invoices under different circumstances.

One of these circumstances is where the special VAT invoice duplicates have been lost. According to the “Regulation on Usage of Special VAT Invoices (guoshuifa [2006] No.156),” a special VAT invoice consists of three basic duplicates:

• Invoice duplicate
• Credit duplicate
• Accounting duplicate

If the foreign-trade enterprise loses the invoice duplicate and credit duplicate of the special VAT invoice after the special VAT invoice has been verified, the accounting duplicate and a “Proof of Tax Clearance for Lost Special VAT Invoice” issued by the in-charge tax authority of the selling party can be used (upon approval of the in charge tax authority of the purchasing party) to apply for the export tax refund.

If the foreign-trade enterprise loses the credit invoice of the issued special VAT invoice after the special VAT invoice has been verified, a copy of the invoice duplicate of the special VAT invoice can be used to apply for the export tax refund.

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