A staff worker of a toy company in Ganyu county of China's eastern Jiangsu province get toys ready for export, Feb 8, 2014. [Photo by Si Wei / Asianewsphoto]

Measure aids trade growth and SMEs to better tap global market, say insiders

A new policy to allow trade service companies to apply for tax rebates or exemptions for export goods will help expand trade growth and encourage domestic small and medium-sized enterprises to better tap the international market, industry insiders said.

Trade service companies will be allowed to apply for tax rebates or exemptions after they sign contracts with small and medium-sized enterprises to sell goods to the overseas market, according to the policy introduced by China's top taxation watchdog.

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"The policy represents a big change in China's export taxation reform. It means that export rebate businesses could be outsourced to trade service companies," said Xiao Feng, deputy general manager of Shenzhen Onetouch Business Service Co.

The policy, which was issued by the State Administration of Taxation early last month, is scheduled to take effect on Tuesday.

In the past, the country's taxation authority adopted a very cautious approach toward the tax-rebate business conducted by service-trade companies, especially after some agencies were found to play roles in tax fraud cases in recent years.

The rising momentum in China's foreign trade in the first half of last year also raised suspicions that companies may have misreported exports to obtain tax rebates, prompting authorities to create a series of new rules to check trade flows.

According to the new policy, service trade providers are only allowed to apply for a tax rebate after being granted the right by SMEs to sell goods in the overseas market.

"As a service trade company, we will provide efficient service for domestic companies to better tap the international market and reduce export costs," Xiao said.

Shenzhen Onetouch Business Service Co, one of the leading online trade service companies based in the Pearl River Delta region, helped exporters to win tax rebates worth 2.3 billion yuan ($371.1 million) in 2013, company sources said.

Sources with the taxation administration said China granted export rebates or exemptions of 838.83 billion yuan to enterprises during the first 10 months of 2013, after the tax authorities streamlined the procedures for export rebates to help foreign trade enterprises tide over difficulties.

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