Other BriefingsChina Monthly Tax Brief: April 2025
In this China Monthly Tax Brief for April 2025, we highlight key taxation developments for businesses:
- E-commerce pilot zones expanded – Hainan Island and 15 new cities join the program, now covering 165 locations nationwide.
- Tax credit incentives in Qinghai – New rules set tailored incentives for A-, B-, and M-grade taxpayers to encourage compliance.
- VAT refunds on transport vessels – Revised rules clarify eligibility, streamline filings, and tighten compliance for buyers of domestically built vessels.
- Tariffs on US goods raised – In response to US hikes, China imposes counter-tariffs reaching 125 percent on certain US-origin goods.
- Nationwide instant VAT refund – China rolls out instant VAT refunds for overseas travelers to boost inbound consumption.
- STA clarified 7 targeted areas of Tax Audit 2025 – A new plan has been released targeting special enforcement actions concerning enterprise-related tax matters
Cross-border e-commerce pilot zones expand to 15 new cities and Hainan Island
On April 25, 2025, the State Council issued official approval (Guohan (2025) No. 40) to establish new Cross-Border E-Commerce Comprehensive Pilot Zones (综试区) in Hainan Island and 15 additional cities and regions, including Qinhuangdao, Baoding, and Erenhot. This marks the eighth round of expansion since the launch of the first pilot zone in Hangzhou in 2015, bringing the total number of cities covered to 165 nationwide.
The expansion is part of China’s broader strategy to promote high-quality development in cross-border e-commerce by advancing policy innovation and institutional reform. These new pilot zones will focus on key priorities such as customs facilitation, preferential tax treatment, and overseas warehouse construction. They are also intended to support regional trade upgrading and contribute replicable models for national policy scaling.
| Key Benefits Available in the New Pilot Zones | |
| Key benefits | Details |
| Export tax refund or exemption | Qualified e-commerce exporters may apply for VAT and consumption tax refund or exemption, provided they are general VAT taxpayers, have secured export tax refund eligibility, and fulfill customs and foreign exchange requirements. |
| “No invoice” tax exemption | Exporters that register their outbound shipments through designated e-commerce platforms and local customs within the pilot zones may enjoy VAT and consumption tax exemption even without valid purchase invoices, unless specifically excluded by the Ministry of Finance or the STA. |
| Deemed profit method for CIT | Eligible enterprises may adopt a simplified income tax calculation method. Small and low-profit enterprises may benefit from preferential corporate income tax (CIT) policies, and income defined as tax-exempt under Article 26 of the Corporate Income Tax Law may also qualify. |
| Simplified export clearance | Retail e-commerce exports may benefit from streamlined customs supervision via a “single list release, consolidated declaration” model, reducing compliance costs and improving clearance efficiency. |
| Simplified compliance for imports | Retail imports through e-commerce are subject to less stringent oversight, without the need for first-time import permits, product registration, or filing.
Such goods are regulated as personal-use items, easing the administrative burden. |
Qinghai tax bureau introduces tax credit incentive measures: A-Grade Taxpayers enjoy 44 facilitations
On April 21, 2025, the Qinghai Provincial Tax Bureau issued the Notice on Optimizing Tax Credit Incentive Measures to Promote Compliance and Honest Tax Payment. The document clarifies incentive and protection measures for A-grade taxpayers, encouragement measures for B-grade taxpayers, and limited incentives for M-grade taxpayers.
According to the Notice, the incentive measures for A-grade taxpayers span 18 categories covering 44 facilitations across tax services and management, project approval procedures, financial fund utilization, and more. Key examples include:
- Reduced audit ratios: For major project audits, such as central budget-supported project inspections, sampling ratios may be appropriately lowered.
- Priority in financial fund allocation: Tax credit status will be considered as a reference factor in financial fund allocation, with A-grade taxpayers prioritized under equal conditions.
- Preferential pilot policies: When introducing preferential policies or convenience measures for pilot enterprises, A-grade taxpayers will be prioritized for trials.
This initiative underscores Qinghai’s commitment to fostering tax compliance and rewarding trustworthy taxpayers through streamlined administration and tangible benefits.
Revised VAT refund policy for international transport vessels: Clearer scope and filing requirements introduced
On April 21, 2025, China’s State Taxation Administration (STA) issued a revised version of the Administrative Measures for Value Added Tax (VAT) Refunds on International Transport Vessels (Announcement [2025] No. 10), replacing the previous version issued in 2020. The revision clarifies refund eligibility, refines filing procedures, and introduces compliance requirements for transport enterprises purchasing domestically built vessels.
| Revised VAT Refund Policy for International Transport Vessels | |
| Key highlights | Details |
| Scope and eligibility | The VAT refund applies to vessels sold by domestic shipbuilders to transport enterprises engaged in international or cross-border operations (including Hong Kong, Macao, and Taiwan).
The transport enterprise, not the shipbuilder, is the refund applicant. The refundable amount corresponds to the VAT listed on the special VAT invoice for the vessel. |
| Filing requirements | Transport enterprises must submit a record-filing form (Export VAT Refund Filing Form) along with proof of international or regional transport qualifications (e.g., licenses or permits).
First-time filers can submit documents electronically. Enterprises that have already filed for general export VAT but not for vessel refunds may modify their existing records without starting over. |
| Refund application window | Applications can be filed from the first day of the month following the invoice issuance date until April 30 of the following year, during any regular VAT filing period. |
| Documentation needed | Refund filings must include a copy of the Certificate of Vessel Ownership, valid business credentials, the VAT special invoice, and a completed Self-use Goods VAT Refund Application Form (including electronic data submissions). |
| Audit and compliance | Tax authorities will verify invoice authenticity and vessel tax filings. False declarations will result in the recovery of refunded VAT and penalties under the Tax Collection and Administration Law. |
| Restrictions and clawback provisions | VAT invoices already credited as input tax cannot be used to apply for a refund, and vice versa.
If the vessel’s ownership or registration changes, or if the enterprise ceases international transport operations, the refunded VAT must be partially repaid based on a net value-to-original value ratio. The repaid amount can be credited against future output VAT once paid. |
This policy update aims to standardize and streamline VAT refunds for vessel purchases, supporting China’s international shipping industry while ensuring compliance and reducing risks of abuse.
China announces retaliatory tariffs on US goods, with rates rising to 125 percent
In response to escalating US tariff hikes on Chinese imports, the Chinese government has implemented a series of countermeasures, invoking domestic laws such as the Customs Law, Tariff Law, and Foreign Trade Law, as well as the fundamental principles of international law. A succession of announcements from the Customs Tariff Commission of the State Council in April 2025 imposed progressively higher additional tariffs on certain US-origin goods.
Effective April 10, 2025, at 12:01 p.m. Beijing time, additional tariffs of 34 percent were levied on designated US imports (Announcement [2025] No. 4). Later the same day, the rate was raised to 84 percent under Announcement [2025] No. 5. Two days later, on April 12, the tariff was further increased to 125 percent, as stipulated in Announcement [2025] No. 6. These surcharges are imposed on top of existing applicable tariff rates.
Despite these changes, current bonded and tax exemption policies remain in effect. However, the additional retaliatory tariffs are not subject to reduction or exemption under any preferential policy.
A transitional arrangement has been provided for goods in transit. Goods of US origin that departed prior to 12:01 p.m. on April 10 and are declared for import between April 10 and May 13, 2025, will be exempt from the additional tariffs. To qualify, the shipment must meet customs documentation requirements, including proof of departure time and properly completed annotations. If additional tariffs were already levied on eligible in-transit goods, importers may apply for refunds and interest.
| Timeline of China’s Additional Tariff Measures on US-Origin Goods (April 2025) | |||
| Effective date & time (Beijing) | Announcement number | Additional tariff rate | Notes |
| April 10, 12:01 p.m. | [2025] No. 4 | +34% | Initial imposition of additional tariffs |
| April 10, 12:01 p.m. | [2025] No. 5 | +84% | Rate increase on the same day as the first imposition |
| April 12 | [2025] No. 6 | +125% | Final stage of escalation |
Transitional exemption:
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Further compliance measures apply to US-origin goods under bonded logistics and processing trade arrangements. While existing bonded policies remain applicable, such goods may not undergo simple processing that alters their classification or origin within customs-supervised zones. When these processed goods (including defective items but excluding by-products) are sold into the domestic market, tariffs must be calculated based on the full value of all bonded inputs, and bonded circulation is not permitted.
This three-stage tariff increase signals China’s firm stance against unilateral US trade actions and demonstrates Beijing’s adherence to a law-based and proportionate approach in handling trade disputes. Authorities emphasize that the response aims to defend national interests while maintaining stability in cross-border trade operations.
Nationwide rollout of “instant VAT refund” policy to boost inbound spending
China has expanded its efforts to attract inbound consumption by launching the nationwide implementation of the “instant VAT refund” service for overseas travelers. On April 4, 2025, the STA released Announcement [2025] No. 9, formalizing the expansion of this pilot policy to all regions with existing departure tax refund systems.
Under this model, eligible foreign visitors can now receive RMB-denominated VAT refunds on-site at designated retailers, immediately upon purchase, by completing a credit card pre-authorization and signing a refund agreement.
This refund mechanism complements the traditional departure VAT refund system and applies to self-use goods purchased by overseas visitors at qualified stores. Refunds are available to non-residents—including foreign nationals and Hong Kong, Macao, and Taiwan residents—who have not stayed in mainland China for more than 183 consecutive days. Goods must be purchased within 90 days before departure, remain unused, and be carried out of the country personally or via checked baggage.
To qualify, the value of eligible goods purchased by the same traveler at a single store on the same day must meet the minimum threshold. Refundable tax amounts depend on the applicable VAT rate: Goods taxed at 13 percent are refunded at 11 percent, and those taxed at nine percent are refunded at eight percent. Refunds are calculated as follows:
Refundable VAT = VAT-included invoice amount × applicable refund rate – agency fee.
Travelers using the instant refund service can receive cash (up to a limit) or bank transfers (with no ceiling). Upon departure, travelers must pass through customs inspection for identity and goods verification. If verified, the pre-authorized credit card hold is lifted and the refund finalized; if not, the pre-authorization may be used to recover funds.
To support this nationwide rollout, the Ministry of Commerce and five other authorities jointly issued Circular No. 84 [2025] on April 26. Key enhancements include:
- Retailer expansion: Relaxation of refund store qualifications to include M-grade tax credit enterprises, decentralized registration authority, and shorter approval times.
- Lower refund threshold: Purchase requirement for eligibility cut to RMB 200 to boost refund participation.
- Service upgrades: Simplified processing, broader product categories, increased cash refund limits, and creation of a unified national information platform for tax refunds.
In parallel, the STA is revising the Administrative Measures for VAT Refunds on Overseas Visitor Shopping to align with the updated policies and facilitate implementation.
These moves signal Beijing’s continued push to stimulate inbound consumption, particularly in retail and tourism-related sectors, by simplifying tax procedures and enhancing the overall visitor experience.
| Summary of Updated Departure VAT Refund Policy (April 2025) | |
| Items | Latest policy |
| Refund types | Traditional departure refund, Instant refund (“buy-and-refund”) |
| Eligibility | Foreign nationals and Hong Kong/Macao/Taiwan residents with <183 days in China |
| Minimum purchase threshold | RMB 200 (previously RMB 500) |
| Refund rates | 11% (for 13% VAT items), 8% (for 9% VAT items) |
| Cash refund limit | Increased to RMB 20,000 |
| Refund methods | Cash (up to limit), Bank transfer (no limit) |
| Store qualifications | Now includes M-grade tax credit retailers |
| Customs verification | Required for all refunds at departure |
| Applicable regions | Nationwide (for regions with existing refund policies) |
| Implementation date | April 2025 |
Also read: China’s New Instant VAT Refund Policy: Boost to Tourism and Retail, Amid Tariff Tensions
STA clarified 7 targeted areas of Tax Audit 2025
On April 1, Guo Shunmin, Director of the Inspection Bureau of the State Taxation Administration, stated that the STA will formulate a work implementation plan for special enforcement actions concerning enterprise-related tax matters and carry out internal self-inspections and self-corrections.
According to Guo, special rectification campaigns will be launched in seven key areas:
- Invoice management
- Export tax rebates
- Land appreciation tax settlements
- Tax inspection
- Information system development
- Response to regulatory violations and risks
- Collusion with non-compliant tax intermediaries
During this process, tax officials who violate regulations through arbitrary inspections or misconduct, or are suspected of disciplinary or legal violations, will be held strictly accountable. The campaigns are part of efforts to deepen the coordinated advancement of strict Party governance and strict tax administration.
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