Since the new VAT Law and its Implementation Regulations came into effect on 1 January 2026, China’s tax administration framework has entered a more refined and systematised phase. A key milestone in this transition is the issuance of State Taxation Administration Announcement No. 5 of 2026, which promulgates the Administrative Measures for VAT and Consumption Tax Refund Exemption on Export Businesses. These New Measures formally replace Announcement No. 24 of 2012, which had governed export tax refunds for more than a decade.
The change represents far more than a textual revision. It is a structural upgrade aligned with the new VAT Law, incorporating accumulated administrative practice and reshaping the overall management logic for export tax refund administration.
From goods and services to a comprehensive business framework
The most fundamental shift lies in the expansion of legislative scope and positioning. The Old Measures were titled Administrative Measures for VAT and Consumption Tax on Export Goods and Services, with a core focus on the export of traditional goods and processing, repair and replacement services. The New Measures change the title to Administrative Measures for VAT and Consumption Tax Refund (Exemption) on Export Businesses, explicitly introducing the concept of “export business” for the first time.
This repositioning aligns with the revision in the new VAT Law that fully integrates processing, repair and replacement services into the broader category of “supply of services.” In practice, the management scope of the New Measures naturally extends to cover refund and exemption matters for cross-border taxable services. It also preserves an interface for service trade that may be brought within the refund scope in future, constructing a more inclusive and forward-looking management framework.
Key rule changes under the new measures
The New Measures do not operate independently. Together with other policy documents issued around the same time, they form a coordinated export tax ecosystem under the new VAT framework.
Clarifying the relationship between administrative measures and preferential policies
The positioning of the New Measures (Announcement No. 5) differs clearly from that of the concurrently issued Announcement on the Articulation of VAT Preferential Policies Following the Implementation of the VAT Law (Announcement No. 10 of 2026). In essence, the New Measures function as the “basic law” and operational manual determining how to calculate and declare export refunds and exemptions. They set out mandatory administrative procedures.
By contrast, the specific scope and conditions for tax preferences such as zero-rating and exemption for cross-border services are stipulated by policy documents such as Announcement No. 10. Enterprises must first determine whether their business qualifies under Announcement No. 10 and then follow the declaration procedures set out in the New Measures.
Adjustments to industry specific refund policies
Simultaneously with the implementation of the New Measures, the Ministry of Finance and the State Taxation Administration have adjusted export VAT refund policies for selected industries. For example, the VAT export refund for photovoltaic products will be cancelled with effect from 1 April 2026. The export refund rate for battery products will be reduced from 9 per cent to 6 per cent between 1 April and 31 December 2026 and will be cancelled entirely from 1 January 2027.
These changes are likely to trigger a short-term increase in export activity during the first quarter of 2026 as enterprises seek to secure higher refund rates before the policy shift. Affected businesses must pay close attention to customs declaration timing and reassess long term pricing, cost structures and contract arrangements.
Refinement of Administrative Procedures
The New Measures also introduce refinements to declaration deadlines, documentation management and review procedures. Enterprises should monitor the detailed operational guidance issued by their competent tax authorities and ensure that internal processes are aligned accordingly.
A three-step response for export enterprises
Facing the transition between the old and new measures alongside related policy adjustments, export enterprises should act promptly across three areas.
Step 1: Internal diagnosis and policy benchmarking (Initiate immediately)
- Review export business structure: Conduct a comprehensive stock-taking of all export businesses, clearly distinguishing between types such as goods export and cross-border services (e.g., R&D, design, software services).
- Conduct Policy Applicability Assessment: Compare each export business item against preferential policy announcements like Announcement No. 10 of 2026 to determine whether the “exemption, credit and refund,” “tax exemption,” or “deemed domestic sales and taxation” policy applies.
- Assess industry-specific impact: For sectors affected by refund adjustments such as photovoltaics and batteries, review existing contracts and production schedules and quantify the financial impact before and after 1 April 2026.
Step 2: Process updates and system adaptation (Complete by end of March 2026)
- Study the new measures and update internal control processes: Organize finance, tax and customs teams to thoroughly study all clauses of the New Measures (Announcement No. 5), focusing on comparing operational differences with the Old Measures, and update the internal Export Tax Refund Operation Manual.
- Upgrade document management system: Improve the collection and archiving processes for electronic and paper documents based on the New Measures’ requirements for filing documents and declaration materials to ensure compliance.
- Coordinate IT system adjustments: Communicate with software service providers to ensure that financial and ERP systems can support the declaration form formats, data calculation logic and declaration interface requirements under the New Measures.
Step 3: Dynamic Tracking and Professional Collaboration (Ongoing)
- Monitor guidance from local tax authorities: Closely follow localized implementation guidelines, training notices and declaration system update prompts issued by the competent tax bureau regarding the implementation of the New Measures.
- Leverage professional institutions: For enterprises with complex operations, a high proportion of cross-border services or those significantly impacted by policy changes, actively consult professional institutions like Acclime for targeted impact analysis and planning advice
- Develop emergency communication plans: Establish rapid communication channels with tax authorities for potential declaration queries or document recognition disputes during the policy transition period.
A new era of export tax refund administration
The issuance of Announcement No. 5 of 2026 by the State Taxation Administration signals a new stage in export tax refund governance under the VAT Law. The emphasis has shifted towards systematic coordination, clearer policy layering and more precise administrative control.
For enterprises, adapting to the new framework requires more than reviewing revised wording. It demands a comprehensive assessment across policy interpretation, internal control systems and commercial strategy. By proactively aligning operations with the integrated structure of VAT Law, preferential policies and administrative measures, businesses can maintain compliance efficiency, mitigate tax risk and navigate sector specific policy adjustments with greater certainty.
