In 2026, the Ministry of Finance and the State Administration of Taxation issued an announcement on value-added tax and consumption tax policies for export business (Ministry of Finance and State Administration of Taxation Announcement No. 11 of 2026), aiming to do a good job in coordinating policies after the implementation of the “Value-Added Tax Law of the People’s Republic of China” and the “Regulations on the Implementation of the Value-Added Tax Law of the People’s Republic of China” and continuing the current systems and practices.
The announcement first clarified the export business that is subject to the value-added tax refund (exemption) policy, including exported goods, cross-border sales services, and intangible assets.
In terms of exported goods, except for certain circumstances, they must also meet the conditions of selling to overseas entities or individuals, declaring to customs and actually leaving the country, making sales in accordance with accounting systems, and collecting foreign exchange in accordance with regulations.
There are also various situations where goods are deemed to be exported, such as goods sold to special areas, goods sold by relevant duty-free goods companies, etc.
Cross-border sales services and intangible assets cover a variety of services and intangible assets sold to overseas units that are completely consumed overseas, as well as international transportation services, space transportation services, external repair and maintenance services, etc.
In terms of VAT refund (exemption) methods, they are divided into tax exemption and tax refund methods and tax exemption and refund methods.
The tax exemption, credit and refund method applies to various situations such as the export of self-produced goods by manufacturing enterprises; the tax exemption and refund method applies to the export of goods by foreign trade enterprises or other units, and cross-border sales of purchased services or intangible assets.
In terms of the VAT export refund rate, in addition to the clear refund rate, the export business refund rate is its applicable tax rate. There are different regulations on the implementation time of the refund rate in different situations.
At the same time, export businesses subject to different tax refund rates should be declared, accounted for and declared tax refund (exemption) separately.
The tax calculation basis for VAT refund (exemption) is determined based on the different types of export business, such as export invoices, ordinary invoices, receipts of income or related invoices for import and export business, etc.
There is a clear formula for the calculation of VAT exemption, offset and refund. If the refund rate is lower than the applicable tax rate, the difference will be included in the cost of export business.
Taxpayers who have both VAT exemption, credit and refund items and VAT refunds upon collection should calculate separately and apply for different policies.
The VAT exemption policy is applicable to export businesses that meet certain conditions, such as goods exported by small-scale VAT taxpayers, old books and other export goods, as well as cross-border sales services and intangible assets such as construction services for engineering projects overseas.
The export business to which VAT taxation policies are applicable also has a clear scope, such as canceling the export tax refund (exemption) for goods, etc., and there are corresponding formulas for calculating the VAT payable.
For exported goods that are subject to consumption tax refund (exemption), tax exemption or taxation policies, corresponding consumption tax policies will be implemented according to different value-added tax policies, including the basis and calculation method for tax refund (exemption), the calculation method of the payable consumption tax, etc.
The announcement also explains other regulations on value-added tax and consumption tax policies for export business, such as filing and declaration requirements, other tax refund (exemption) regulations, comprehensive bonded zone policies, accounting requirements for foreign trade enterprises, etc.
This announcement will come into effect on January 1, 2026, and some old policies will be abolished at the same time.
