What is re-export tax refund?

China's customs duty refund system includes two categories: re-export drawback and overpaid duty refund.
 
When imported goods that have already paid import duties are re-exported after processing, manufacturing, or repair within the territory, the customs refunds all or part of the original paid import duty, which is called re-export drawback. Currently, China's customs only applies this to raw materials, auxiliary materials, and spare parts imported under feed-processing contracts for processing enterprises that have previously violated customs laws or failed to fulfill their verification obligations over a long period.

For re-export drawback, the original taxpayer should go through the re-export procedures for the relevant goods with the customs that originally collected the duty. The customs then assesses the amount of duty to be refunded based on the quantity of materials consumed by the actual exported goods, issues a refund certificate, and provides it to the original taxpayer to handle the refund procedures with the designated bank.

Purpose of Re-export Drawback

1. Promote Export Trade: By reducing the cost burden of exported goods, it enhances the competitiveness of domestic goods in the international market.
2. Optimize Resource Allocation: Encourages enterprises to utilize domestic and foreign resources for production and processing, promoting the efficient operation of the global supply chain.
3. Avoid Double Taxation: Ensures that the same goods are not subject to repeated customs duties when moving between different countries, safeguarding trade fairness.
4. Stimulate Industrial Upgrading: Compels enterprises to focus on the production and export of high-value-added products, driving the optimization and upgrading of the industrial structure.

Conditions for Applying Re-export Drawback

• Paid Import Duties: The goods must have been imported and the relevant customs duties paid as required.
• Value-added through Domestic Processing: The goods must undergo substantial processing, manufacturing, or repair within the importing country, achieving value addition.
• Re-export Confirmed: The goods must indeed be re-exported to a foreign country, typically requiring the submission of corresponding export customs declaration documents for verification.
• Limitations under Specific Circumstances: In certain cases, such as having a history of violating customs regulations or failing to fulfill verification obligations in a timely manner, eligibility for the re-export drawback may be affected.

Types of Re-export Drawback

• Full Drawback: Under eligible conditions, enterprises can apply for a refund of the full original paid import duties.
• Partial Drawback: Depending on factors such as the type of goods and the value-added proportion from processing, only a portion of the duties may be refunded.