In a move aimed at enhancing the development of cross-border e-commerce, the State Administration of Taxation (SAT) has announced new regulations designed to streamline the export tax refund process for goods exported through overseas warehouses. These changes, outlined in Announcement No. 3 of 2025, support the growing trend of cross-border e-commerce and provide greater flexibility for businesses using the overseas warehouse model. Below, we break down the key elements of the announcement and its implications for businesses engaged in this form of international trade.
Tax Refund Process for Goods Exported via Overseas Warehouses
The SAT will now allow taxpayers to apply for export tax refunds (or exemptions) once goods are declared and shipped out of the country through overseas warehouses (customs supervision code “9810”). If the goods have already been sold at the time of the application, the standard export tax refund procedures will apply. However, if the goods remain unsold, taxpayers can take advantage of a new “tax refund upon departure” option, which allows them to apply for an export pre-tax refund.
This “pre-tax refund” system is designed to ease cash flow for businesses by allowing them to receive refunds ahead of the actual sale of goods, with a recalculation of sales to follow once the goods are sold.
Application and Documentation Requirements
To apply for the export pre-tax refund, taxpayers must submit a customs declaration form along with supporting documentation. Specific details include:
- Declaring the “Overseas Warehouse Pre-refund” business type (code: HWC-YT) in the tax refund declaration.
- Separating goods that have been sold from those that are unsold, with corresponding declaration processes for each.
- Foreign trade and production enterprises must declare separately, using distinct serial numbers and association numbers as required.
These guidelines are aimed at ensuring clear differentiation between goods that have been sold and those still in stock, enabling a more accurate tax refund process.
Handling Export Pre-Tax Refund Accounting
Taxpayers must finalize the accounting of export pre-tax refunds within each VAT tax declaration period. However, foreign trade enterprises may also apply for refunds outside of the regular VAT period with prior consent from the tax authorities. If the accounting deadline is missed, the tax authorities will recover any pre-tax refunds that have already been processed.
The new policy also outlines procedures for taxpayers when discrepancies arise between the pre-tax refund and the actual sales of goods. These adjustments will be handled via an amended declaration process, with either the refund being recalculated or the pre-tax refund returned in full, depending on the sales situation.
Record-Keeping and Documentation
For tax purposes, businesses exporting through overseas warehouses must maintain detailed records to substantiate their claims for tax refunds. These records include:
- Sales ledgers, invoices, and any other documentation proving the sale of goods.
- In cases where an export pre-tax refund is claimed, businesses must retain these sales documents for verification by tax authorities within 15 days of the sale.
The SAT has emphasized that businesses may choose to store these documents either physically, digitally, or in a mixed format, but they must be accessible for auditing purposes.
Addressing Potential Fraud
The new rules also stress the importance of accurate and truthful declarations. Tax authorities will review all export pre-tax refund claims and ensure that sales documents are authentic. If any discrepancies or fraudulent activities are discovered, the tax refund may be revoked, and businesses could face penalties under the Law of the People’s Republic of China on the Administration of Tax Collection.
Transitional Measures
The announcement also provides a transition period for businesses that have already exported goods via overseas warehouses but have not yet applied for tax refunds. These businesses will need to comply with the new regulations moving forward.
Conclusion
The State Administration of Taxation’s latest announcement marks a significant step in supporting the growth of cross-border e-commerce, particularly for businesses utilizing overseas warehouses. By introducing the export pre-tax refund mechanism, the SAT aims to provide more liquidity and operational flexibility to businesses while simplifying the export tax refund process. However, businesses must ensure they adhere to the detailed application and documentation requirements to take full advantage of these changes.
As always, companies engaging in cross-border trade should consult with tax professionals to ensure compliance with the new rules and optimize their tax strategies.