GuoFa [1997] No.8 February 25, 1997

The people¡¦s governments of various provinces, autonomous regions, municipalities directly under the Central Government, all ministries, commissions and directly subordinate institutions of the State Council:

To further invigorate large and medium-sized State-owned enterprises, expand foreign trade and export and impel the agency system, the State Council has decided to implement measures for tax "exemption, credit, and refund" for goods exported by production enterprises, which have the power to engage in import and export, themselves or through authorized foreign trade enterprises as their agents. The relevant issues are hereby notified as follows:

I. Implementation scope for tax "exemption, credit, and refund". For goods exported by various production enterprises, which have the operation power to engage in import and export, themselves or through authorized foreign trade enterprises as their agents, unless otherwise provided, the measures for tax "exemption, credit, and refund" shall be implemented without exception.

The implementation of measures for tax exemption for export goods by foreign investment enterprises approved for establishment before December 31, 1993 shall continue through December 31, 1998. The measures for tax "exemption, credit, and refund" shall also be implemented after that term expires.

II. Tax "exemption" in the implementation of measures for tax "exemption, credit, and refund" means that the goods exported by production enterprises themselves or through authorized foreign trade enterprises as their agents shall be exempt from value-added tax at the links of production or sale within these production enterprises; tax "credit" means that with respect to goods exported by production enterprises themselves or through authorized foreign trade enterprises as their agents, to credit the tax paid on the raw materials, parts and components consumed which shall be exempted or returned against the tax payable on goods for domestic sale ; tax "refund" means that where the goods exported by production enterprises themselves or through authorized foreign trade enterprises as their agents account for more than 50% of the total current-period sales of goods of these enterprises, when the creditable tax has not been completely credited within one quarter because it is greater than the tax payable, the portion of tax not completely credited shall be refunded upon approval by the tax authority in charge of export tax refund.

III. In carrying out the measures for tax "exemption, credit, and refund", the refund rate stipulated in the Circular of the State Council Concerning Lowering the Tax Refund Rate for Export Goods (GuoFa [1995] No.29) shall be implemented, and the amount of tax "exemption, credit, and refund" shall be calculated on the basis of E O. B. price of export goods.

IV. These Measures shall enter into force as of January 1, 1997. Specific measures for implementation shall be formulated by the Ministry of Finance and the State Administration of Taxation.

The implementation of measures for tax "exemption, credit, and refund" for goods exported by production enterprises, which have the operation right to engage in import and export, themselves or through authorized foreign trade enterprises as their agents is an important reform of the measures for administration of export tax refunds. People's governments at various levels shall proceed by taking the situation as a whole, strengthen leadership and actively support this reform. Various relevant departments shall take care to cooperate closely, promptly solve the problems emerging in the implementation, and in the meantime summarize the experiences conscientiously so as to create conditions for gradually enlarging the implementation scope of the measures for tax "exemption, credit, and refund" and further improving the mechanism of export tax refund.

Promulgated by The State Council on 1997-2-25