NEW DELHI , JULY 21, 2010: CHINA’s revocation of export VAT refund for 406 items became effective from July 15, 2010, thereby effectively reversing its earlier trend over the last two years, of increased export VAT rates to encourage exports and enhance the country’s competitiveness in the international market.

The Chinese Ministry of Finance and the State Administration of Taxation had issued a circular in June this year, to revoke the export VAT refund for 406 items in June this year. The circular impacted six product categories including steel products, non-ferrous metal products, silver powder, alcohol and corn starch, pesticides, pharmaceutical and chemical products, and plastic, rubber and glass products.

 Exporters of these products would no longer be entitled to a VAT refund that prevailed at five percent or nine percent. Export VAT rates in other product categories range from 0 per cent to 17 per cent.