Whether you’re a beginner or have been working with imports from China for years, it´s very probable you’ve heard of a ghostly figure, who many people regard as if it were the Loch Ness Monster of imports. It’s about the tax refund. And in this article, we will decipher what is a myth and what is the reality.
The answer is simple and short. It actually consists of three letters, YES. But it doesn’t work like tax refund in some countries airports where they refund you the taxes on the goods you buy while visiting that country. Chinese do not refund the taxes to the person who bought it but to the one who sold the goods. I’m not talking about who produced it, but about the company that made the export (either the factory or an intermediary).
In fact, the tax refund is the true reason whereby there are so many brokers for any product because a broker can sell a product at the same price as he bought it and still makes a very good profit. Obviously, this does not happen, which really happens is that honest intermediaries (those who are not trying to swindle, but reselling the product) have two profits. The first one is a margin between the purchase and the sale price and then (two months later) the big prize, tax refund, which approximately goes from 5% to 14% depending on the product. For simple plastic products, whose rate of return is 14%, any exporter makes a profit of 5% of the price he got it plus 14% of the tax refund.
There are two ways that work perfectly depending on the amounts and buying frequency of a foreign company.
We at Awarecon have extensive experience with tax returns and have all the tools to help our clients do either of the above-mentioned in the proper way. We can advise, assist or represent our clients to open their company in China. As well as recommending our friendly export company, which we have been working with for the last few years.