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Can I reclaim the 17% China VAT for products exported out of the country?

Posted: 2013-03-18

Full Question

Hi, I have been importing tablet PCs and Android smartphones from China for the past year. I am assuming 17% VAT has already been paid in China by the manufacturer/reseller. My question is can I reclaim this 17% VAT as the goods are exported out of China? Also I have to pay UK customs to cover the 20% VAT in the UK.

Can I claim the 17% VAT already applied in China, what is the process and how long does it take?

Answer

Only a China-based, fully licensed company (regardless if Chinese or overseas owned) with export rights and VAT registration can apply for a VAT rebate from the China government. Assuming you do not have a legal entity of your own in China, I am afraid you can't apply to the PRC (People's Republic of China) government asking for a rebate. As far as making a claim in the UK (United Kingdom) to get a credit for taxes paid in China…that is a bit outside of my expertise as I am familiar with China rules but not UK. I would consult a UK based specialist.

As a side note, many sellers in China invoice their overseas buyers for VAT but keep the money in their pocket rather than running official books. Essentially, they don't pay their sub-suppliers tax and thus don't can't show receipts of tax paid to the PRC customs authority at time of export. No receipts given to government = no rebate given to export = illegal (“gray channel” sounds nicer) export. Common but not technically…legal. I don't recommend you try that method. I raise this issue with you because if you are lucky enough to have the UK government say you can use the PRC tax to offset the UK tax, the UK will most likely want proof of payment and I fear your supplier may not be able to provide that to you.

By the way, do be aware that there are a lot of wholesaler scammers (see this page: Genuine products from china? out there dealing in these products. It is great that you found a legit vendor.

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