Thursday, July 12, 2007

China's new VAT export refund policy

China's new value-added tax refund rate policy was announced on June 19th. In essence, the new policy will reduce the amount of VAT refund currently enjoyed by exporters in China. The scope of impact will depend on both the exporter's structure as well as the type of product it exports (a product's classification determines the level of export rebate available).

It is clear that this policy change will have a direct impact on the competitiveness of Chinese exports (from both foreign and Chinese firms) as well as the strategies of western firms using China as an export source for foreign market consumption.

We're conducting a brief survey to gauge the potential impact of this new policy on foreign firms sourcing from China as well as the intended response to mitigate the negative consequences. Please share your thoughts with us.

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