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Can My China VAT Offset My UK VAT?

Hi, I have been importing Tablets, PCs and Android Smartphones from China for the past year. I am assuming 17% VAT has already been paid in China by the manufacturer/reseller. My question is, can I reclaim this 17% VAT as the goods are exported out of China? Also, I have to pay UK customs to cover the 20% VAT in the UK  :(

Can I claim the 17% VAT already applied in China, what is the process and how long does it take?  Many thanks.

Only a China-based, fully licensed company (regardless if Chinese or overseas owned) with export rights and VAT registration can apply for a VAT rebate from the Chinese government.  Assuming you do not have a legal entity of your own in China, I am afraid you cannot apply to the PRC’s government, asking for a rebate.  As far as making a claim in the UK to get a credit for taxes paid in China I cannot advise you.  That is a bit outside my expertise as I am familiar with Chinese rules but not UK’s.  I would consult a UK based specialist.

As a side note, many sellers in China invoice their overseas buyers for VAT but keep the money in their pocket rather than running official books. Essentially, they don’t pay their sub-suppliers tax and thus don’t/can’t show receipts of tax paid to the PRC customs’ authority, at time of export. No receipts given to government = no rebate given to export = illegal (“gray channel” sounds nicer) export.  Common but not technically…legal.  I don’t recommend you try that method. Here is a blog post explaining the practice: ExW purchases WITHOUT receipts I raise this issue with you because if you are lucky enough to have the UK government say you can use the PRC tax to offset the UK tax, the UK will most likely want proof of payment and I fear your supplier may not be able to provide that to you.

BTW, which wholesaler did you use? There are a lot of scammers (see this story: http://chinasourcinginfo.org/2011/08/22/genuine-products-from-china/) out there dealing in these products. I am happy you found a legit vendor.

Question answered by Mike Bellamy, host of “Ask the Experts” at the China Sourcing Information Center.

Mike Bellamy is an Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com )

 

 




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