Understanding key tax-related expressions is crucial for any businessperson navigating the complex world of taxation. Here are some essential terms that every entrepreneur should be familiar with, in order to effectively manage their tax obligations and make informed decisions.

TaxExpress

"TaxExpress" is a brand for cross-border tax services launched by China's State Taxation Administration in 2023.

It aims to provide taxpayers with more professional, standardized and internationalized tax services through the entire life cycle of cross-border investment.

To learn more, watch the video provided by the State Taxation Administration.

Stamp tax on offshore trade

Offshore trade refers to a trade model in which goods are transferred directly from an exporting country to an importing country without entering the border of a middle country — where contracts, payments, logistics, insurances, financial arrangements, as well as other trading documentations are processed.

Offshore trade in several pilot free trade zones, including the China (Shanghai) Pilot Free Trade Zone and the Lin-gang Special Area, are exempt from stamp tax from April 1, 2025 to Dec 31, 2027 to boost the development of offshore trade.

Refunding upon purchasing

The State Taxation Administration has updated its tax refund policy for eligible international visitors, shifting from a refund-upon-departure model to a refund-upon-purchase model.

This service allows eligible international visitors, shopping at designated stores in regions where China's departure tax refund policy is implemented, to receive an upfront refund, or prepaid refund, in renminbi at the time of purchase.

Eligible international visitors include foreigners who have resided continuously within China for no more than 183 days.

The new model applies to items purchased by eligible international visitors in designated stores and meeting conditions for tax refund, except:

• Items prohibited or restricted for exit as stipulated in the List of Items Prohibited and Restricted for Entry and Exit of the People's Republic of China.
• Items sold by tax refund stores and subject to value-added tax exemption policies.
• Items excluded by regulations of the Ministry of Finance, the General Administration of Customs, or the State Taxation Administration.

‌VAT exemption, deduction and refund

Manufacturers that export goods produced by themselves or goods that are considered to be produced by themselves, and those offering processing, repairs and assembly services to foreign parties, as well as selected manufacturers exporting goods not produced by themselves are exempt from paying VAT.

The input tax amount is deducted from the payable VAT amount (excluding the payable VAT amount subject to policies on the VAT refund upon collection or refund after collection). Any remaining amount after the deduction is refunded.

'Smart diagnosis'

The "smart diagnosis" service, added at the China (Shanghai) International Trade Single Window, offers comprehensive guidance and solutions for export tax refund declarations.

It focuses on taxpayers' declaration procedures, query resolutions and problem-solving, integrating intelligent recognition of real tax refund declaration scenarios.

This service aids businesses in analyzing operational uncertainties and in quickly adjusting declaration data.

Source: Shanghai Municipal Tax Service, State Taxation Administration

Note: The English explanations of the terms are for reference only; the official Chinese documents shall prevail.