[Global IDT Insights] China Amends VAT Refund Policy Effective September 2025

Editorial Team – [2025] 178 taxmann.com 387 (Article)

1. China issues amendment on VAT end-of-period retained tax refund policy

• Manufacturing, scientific research & technical services, software & IT services, and ecological/environmental management industries: eligible for monthly refund applications.
• Real estate development and operation industry: eligible for a 60% refund of newly added retained credits, subject to thresholds (≥ Renminbi (RMB) 500,000 and six consecutive months/two quarters of positive balances).
• Other industries: proportional refunds (60% up to RMB 100 million, 30% above RMB 100 million) after meeting six-month continuity and RMB 500,000 increase thresholds.

(b) Eligibility Conditions: Tax credit rating of A or B; no fraudulent VAT refund, false invoicing, or repeated evasion penalties in past 36 months; not availing other VAT refund/levy-upon-refund schemes post 01-04-2019, unless repaid.

(c) Calculation Methods: Refunds determined using prescribed formulas linked to input tax composition ratios derived from VAT deduction vouchers.

Exporters must first apply for VAT exemption and refund before seeking retained tax refunds.

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