China's VAT Refund Extended

China expands the application of VAT refund policies to other industries to support more enterprises in resuming their operations and facing difficulties in cash flow.


The Ministry of Finance and the State Taxation Administration jointly issued Announcement [2022] no. 21 on "Expanding the Industry Scope of the VAT refund policy", according to which the policies related to the full refund of the existing VAT credit and the incremental VAT credit are expanded to other seven industries.


Currently, the VAT refund policies are limited to micro and small enterprises and enterprises operating in six industries, namely "manufacturing", "scientific research and technical services", "electricity, heating, gas and water production and supply", "software and information technology services", "ecological protection and environmental governance" and "transport, warehousing and postal", together referred to as "Manufacturing and Other Sectors".


Announcement 21 will expand VAT refund policies to include enterprises operating in the following industries:

  • "wholesale and retail",

  • "agriculture, forestry, animal husbandry, fishery",

  • "accommodation and catering",

  • "residential services, repair and other service industries",

  • "education",

  • "sanitation, social security, and social welfare", and

  • "culture, sport, and entertainment".


Eligible enterprises can apply for the one-off refund of the existing VAT credit and the refund of the incremental VAT credit with the competent tax authorities starting from July 2022.


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