How Export VAT Refund Works in China — And Who Actually Gets It
- Roman Verzin
- May 12
- 3 min read
Updated: Aug 8
If your Chinese company exports goods, you may be eligible for a refund of the VAT you paid when buying them in China. But to get that refund — you need to follow the rules.
Let’s break it down.
Step-by-step: How VAT refund works
1. You buy the goods
Your supplier issues a special VAT fapiao — not just a normal invoice.
This is a government-issued VAT invoice, required for domestic transactions.
The fapiao must match:
Your declared HS code
The customs declaration
Export documents: invoice, contract, packing list
Your company’s business scope
2. You export the goods
This means filing a customs declaration —
with the correct product code, value, and your company as the exporter.
3. You apply for the refund
Submit all documents to your local tax bureau.
4. Tax bureau reviews your case
If approved — the refund goes back to your Chinese bank account.
And it is not taxed again.
So what’s the catch?
Your company must prove real operations.
Otherwise, you can’t apply for the refund.
The tax bureau will check:
Office space (typically minimum 20–30 sqm)
Local staff on payroll
Social insurance contributions
Monthly tax filings
Proper accounting and compliance
In short: substance is required.
Virtual companies are not eligible.
How much do you get back?
That depends on the product category.
Some products qualify for full 13% refund
Others get partial refund (like 6% or 9%)
Some goods get no refund at all
This is based on:
National policy
HS code classification
So before you plan around VAT refunds:
Choose the correct HS code
Check with a qualified accountant
Never base your business model on refund rates without checking first.
What if something is wrong?
If your documents don’t match:
Refund may be delayed
Or rejected entirely
You may be flagged for audit
This affects future refunds — and your company’s tax profile.
Timeline: How long does it take?
Even if you do everything right:
First refund: usually 6 to 9 months
After approval: next refunds take 1 to 3 months
That means your cash is frozen for months —
VAT paid but not yet refunded.
What about your suppliers?
Most foreign buyers in China purchase FOB goods.
That means the Chinese supplier handles the export — and keeps the VAT refund.
If you tell your supplier: “I’ll buy through my Chinese company now” —
They'll likely increase the price.
Why? Because:
They lose the VAT refund
Or your volumes are too small
Or your country is on a sensitive list
Or they weren’t compliant in the first place
Sometimes they won’t raise the price — and that’s a red flag.
You need to ask: why?
It might mean:
Product doesn’t qualify for refunds
Supplier doesn’t work with VAT
You’re being overcharged silently
Understanding this difference helps you keep your margins.
Export agents in China
There are many export agents offering support with VAT refunds.
Their fees range from 1% to 3%, depending on your product and volume.
So if you don’t have your own substance yet,
you can work through a local export company.
But again — don’t build your entire business around this refund.
Chinese exporters know the system better. They move faster and cheaper.
Key insight
VAT refund is not a business model.
It’s a benefit for companies with real presence in China:
Office
Staff
Real supply chain
If that’s your case — great.
If not — plan accordingly.
Bottom line
Export VAT refund in China can work — if you do it right.
✅ Real operations
✅ Matching documents
✅ Right product category
✅ Realistic timelines
✅ Smart supplier management
But most importantly — don’t make it the core of your business idea.
In the next article, we’ll explain how to pay dividends from your Chinese company:
What taxes apply
What the process looks like
When it makes sense — and when it doesn’t
Have questions about your export model or VAT position in China?
Talk to us — we’ll help you make it clear.