China widens de­par­ture port tax re­fund pilot

China Daily (Canada) - - BUSINESS - By LI JIABAO li­ji­abao@chi­nadaily.com.cn

China onThurs­day an­nounced the ex­pan­sion of a pro­gram for ex­porters to get a tax re­fund at de­par­ture ports, which should shorten their tax re­fund pe­riod, re­searchers said.

Start­ing on Sept 1, the pilot will be ap­plied at a to­tal of eight ports — Nan­jing, Suzhou, Lianyun­gang, and Qing­dao in coastal ar­eas, and the ports of Wuhu, Ji­u­jiang, Wuhan and Yueyang in Cen­tral China, ac­cord­ing to a state­ment of theMin­istry of Fi­nance, Gen­eral Ad­min­is­tra­tion of Cus­toms and State Ad­min­is­tra­tion of Tax­a­tion.

The au­thor­i­ties ini­ti­ated the pilot in Au­gust 2012 at the ports of Qing­dao and Wuhan. Qual­i­fied ex­porters will get their re­funds at the de­par­ture ports once their cargo departs from these ports and is shipped abroad via theYang­shanPort Bonded Area, part of the China (Shang­hai) Pilot Free Trade Zone.

Wang Haifeng, a re­searcher with the In­sti­tute for In­ter­na­tional Eco­nomic Re­search at the Na­tional Devel­op­ment and Re­form Com­mis­sion, said that the ex­pan­sion of the pro­gram has “great sig­nif­i­cance”.

“The move is a trade fa­cil­i­ta­tion mea­sure that will help re­duce the cost for ex­porters. The tax re­fund pe­riod will be sig­nif­i­cantly short­ened in the ports and thus ease the cash flow of the ex­porters,” Wang said.

“In­stead of di­rectly stim­u­lat­ing ex­ports, the mea­sure will ease cap­i­tal pres­sure of ex­porters through build­ing a fa­vor­able mar­ket,” he added.

China is the world’s largest goods trader. Over­all trade in the Jan­uary-July pe­riod rose 2 per­cent from a year ear­lier with ex­ports edg­ing up 3 per­cent while im­ports rose 1 per­cent. The govern­ment pledged at the begin­ning of this year to achieve for­eign trade growth of 7.5 per­cent for the whole year.

Chi­nese ex­porters have in­creas­ingly voiced com­plaints about the chal­lenges, in­clud­ing trou­ble­some tax re­bates and dif­fi­cult fi­nanc­ing, that have risen along with costs in re­cent years.

Liu Tiany­ong, direc­tor of Hwua­son Lawyers in Bei­jing, told the Na­tional Busi­ness Daily that some ex­porters can­not make money from sell­ing goods abroad and only have their eye on the tax re­fund.

“A long-last­ing tax re­fund will surely lower the cap­i­tal pres­sure of ex­porters,” Liu said.

Wang added that the ex­pan­sion of the de­par­ture port tax re­fund pilot will “have some ben­e­fits on ex­ports but not very great in the short term.

“The long-term ben­e­fits will be very great. The ex­port busi­ness in these newly in­cluded ports, which are less de­vel­oped than the Shang­hai Yang­shan port, will be boosted af­ter the mea­sure is put into ef­fect,” Wang said.

He added that the lat­est move is also an ex­pan­sion of the pilot mea­sures in theChina (Shang­hai) Pilot Free Trade Zone, show­ing the ra­di­a­tion ef­fect of the zone.

“De­par­ture port tax re­funds are likely to be ex­panded across the whole coun­try by Septem­ber 2015 as the dif­fi­cul­ties of ex­pand­ing the pilot have less­ened. This will be an im­por­tant step to ease the cap­i­tal short­ages for ex­porters and also shows that the govern­ment in­tends to ex­tend the in­flu­ence of the Shang­hai free trade zone across the coun­try,” Wang said.

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