In recent years, China trade surplus has been increasing tremendously. According to statistics from Customs, China total exports for the first five months of 2007 have reached USD 443.5 billion, an increase of 27.8% over the same period last year. Its trade surplus hit USD 85.7 billion, which was an increase of 83.1% over the same period last year. China trade surplus is expected to exceed USD 250 billion for the year 2007.
However, trade disputes have been escalating between China and its trading partners. To ease such trade tension, on 19 June 2007, the Ministry of Finance and the State Administration of Taxation jointly issued Circular No. 90 to reduce VAT refund rates for an extensive range of commodities which has been effective since July 1st 2007. Furthermore, in July 2007, the State Administration of Taxation and Ministry of Commerce issued a notice about the restricted catalog of processing trade, which had significant impact on processing trading enterprises.
Mr. Anthony Chau, Senior Manager of KPMG Advisory (China) Limited, will lead attendees to discuss the above issue and share some information in the beginning:
- The latest round of VAT refund rate reduction and new regulations
- Tax impacts of the new regulations
- Possible strategies the companies can consider
- Tax planning ideas for VAT export refund rate reduction
- Strict policy about processing trade
Speaker: Mr. Anthony Chau, Senior Manager of KPMG Advisory (China) Limited
Event review
In recent years, China’s trade surplus has been increasing tremendously. According to statistics from Customs, China’s total exports for the first five months of 2007 have reached USD 443.5 billion, an increase of 27.8% over the same period last year. Its trade surplus hit USD 85.7 billion, which was an increase of 83.1% over the same period last year. China’s trade surplus is expected to exceed USD 250 billion for the year 2007.
However, trade disputes have been escalating between China and its trading partners. To ease such trade tension, on 19 June 2007, the Ministry of Finance and the State Administration of Taxation jointly issued Circular No. 90 to reduce VAT refund rates for an extensive range of commodities which has been effective since July 1st 2007. Furthermore, in July 2007, the State Administration of Taxation and Ministry of Commerce issued a notice about the restricted catalog of processing trade, which had significant impact on processing trading enterprises.
Mr. Anthony Chau, Senior Manager of KPMG Advisory (China) Limited, led the attendees to discuss the above issue and shared some information in the beginning. Please click 071116.eurocham.vat_refund_presentation to see the presentation of Anthony.
Discussion points:
1. The latest round of VAT refund rate reduction and new regulations
2. Tax impacts of the new regulations
3. Possible strategies the companies can consider
4. Tax planning ideas for VAT export refund rate reduction - Strict policy about processing trade
Questions raised by attendees:
1. Should FIEs in China pay management fee or services fee to the company abroad? 2. What tax should be paid when introducing technicians abroad to do training in China?
3. Which side should the experts employed abroad sign contract with, the general office abroad or the local research center in Chengdu?