On June 25, 2019, the General Department of Customs issued Official Letter No. 4138/TCHQ-TXNK guiding the Customs Departments of provinces and cities to agree on the application of import duty exemption mechanism for imported raw materials and supplies are used to produce goods exported on the spot.
This new guidance by the General Department of Customs replaces the previous guidance content that export goods on-site are inconsistent with the export definition defined in the Commercial Law, and therefore raw materials and supplies imported used to produce on-site exported products are not exempt from import duties (please refer to our newsletter on 12/10/2019 on Official Letter 5826 / TCHQ-TXNK).
This official letter helps answer the problems of the business community regarding the issue of tax exemption for raw materials and supplies imported to produce on-the-spot export goods. However, the mechanism of tax refund for enterprises that have been tax arrears according to Official Letter 5826 has not been instructed explicitly in Official Letter 4138.