China's VAT Credit Refund Policy: How To Succeed

Since March 2022, the Chinese government has implemented value-added tax (VAT) credit refunds on a large scale to help enterprises in specific sectors facilitate cashflow and sustain a stable macroeconomic performance.

From April to May 2022, the VAT credit refunds totalled 1.34 trillion yuan. According to the Announcement [2022] No. 21, starting from 1 July, companies in another seven sectors can now enjoy the VAT credit refund policy, including businesses active in wholesale and retail sales, agriculture, accommodation and catering. China's VAT credit refunds are expected to rise to 1.64 trillion yuan this year and become part of the usual routine compliance for taxpayers.

Foreign businesses operating in China under the categories of eligible companies are encouraged to apply for a full refund of incremental VAT credit on a monthly basis, and a one-off refund of their remaining VAT credit. However, when our tax specialists were called upon to assist foreign