Foreign-Trade Enterprises Can Still Apply for Input VAT Credit Certificates

China’s State Administration of Taxation (SAT) issued an Announcement on May 25 extending the time for which an enterprise engaged in foreign trade (“foreign-trade enterprise”) can apply for a certificate claiming input VAT credit. The “Announcement on Issues Concerning the Deduction of Input VAT on Goods Exported but Deemed as Sold Domestically by a Foreign Trade Enterprise (guoshuifa[2012] No. 21, hereinafter referred as the ‘Announcement’)” provided that foreign-trade enterprises that have not applied for the issuance of an Input VAT Credit Certificate (“Certificate”) within the time frame stipulated in an earlier Circular (discussed below) can still apply for it with the in-charge tax authority after collecting all the relevant documents. The Certificate is required in order for foreign-trade enterprises to claim input VAT credit where they failed to make its VAT refund/exemption filing for export goods in a timely manner. The Announcement took effect on June 1, 2012.

Guidance on the Certificate of Input VAT Deduction on Goods Exported but Deemed as Sold Domestically (Guoshuihan [2008] No. 265)

Under “The Circular on Issues Concerning the Deduction of Input VAT on Goods Exported but Deemed as Sold Domestically by a Foreign Trade Enterprise (guoshuihan [2008] No. 265, hereinafter referred as the ‘Circular’),” which came into effect on April 1, 2008, foreign trade companies are required to complete VAT special invoice authentication procedures within a prescribed period in order to claim VAT deductions or refunds on the purchase of goods. If not, the VAT will not be allowed to be deducted or refunded.

Where a foreign-trade enterprise fails to make its VAT refund/exemption filing for export goods or to collect all required documents for purposes of the VAT refund/exemption filing within the prescribed period, it must apply to the related tax authorities for the issuance of the Certificate within 30 days after the expiration of the prescribed period in order to apply for deduction of the relevant input VAT.

After the foreign trade company obtains the Certificate, it should fill out the deductible input VAT amount specified on the Certificate into the company’s VAT Tax Return Form. The company should then apply for deduction of the relevant VAT amount with the competent tax authority in the succeeding taxable period.

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