Connect & Solve
Trade Q&A
What conditions must self-used old production machinery and equipment meet to enjoy VAT refund upon export?
or complex compliance issues.
clearance and fund security.
I am the head of foreign trade at a plastic products factory in Shanghai. Last week, we finalized the deal to export two 5-year-old used injection molding machines to Southeast Asian customers, and we are now preparing customs declaration documents.
I heard from industry peers that some used equipment can apply for VAT refund while others cannot. These two machines we purchased have already claimed input VAT deduction at the time of purchase, and they have some signs of wear and tear.
I am particularly anxious: first, I am not sure if we can get the VAT refund, as this amount can ease our cash flow pressure; second, I am afraid that if we prepare the refund documents incorrectly, it will cause the goods to be detained at the port or held by customs, delaying the delivery deadline to customers and leading to liquidated damages. In addition, I do not know what common misconceptions we should avoid, for fear of accidentally stepping into compliance pitfalls. Could you please explain in detail?
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
First，two common misconceptions about used equipment export VAT refund: one is that all used equipment can apply for VAT refund，the other is that used equipment that has claimed input VAT deduction cannot enjoy VAT refund. Falling into these misconceptions may trigger a series of negative consequences: for example，declaring VAT refund in violation of regulations without meeting the refund conditions will trigger tax investigations and halt the VAT refund process. If the documents are also inconsistent，it may also trigger customs valuation disputes，resulting in high demurrage charges，storage fees，and even customs seizure，affecting the enterprise's export credit rating，and subsequent VAT refund declarations or customs clearance will be subject to strict inspections.
Physical risk isolation measures should start with pre-inspection: first confirm the ownership of the equipment，ensure that the equipment is self-used by the enterprise and used for production and operation，verify the input VAT deduction record，used equipment that has claimed input VAT deduction shall declare VAT refund in accordance with regulations，and those that have not claimed input VAT deduction shall provide a non-deduction certificate. In addition，prepare documents such as used equipment valuation reports and equipment service life certificates in advance to ensure that the declaration information is consistent with the actual situation.
Exclusive stop-loss tip: Before formal declaration，entrust a professional foreign trade agency to conduct pre-declaration verification. If it is found that the conditions for VAT refund are not met，adjust the declaration method to tax-exempt declaration in time to avoid triggering credit warnings due to illegal declaration，and reduce unnecessary document preparation costs.
Victor SunYears of service：5Customer Rating：5.0
Trade Risk Control ManagerStart a Chat
When declaring used equipment for export, focus on the compliance of the customs valuation procedure. If the declared price deviates too much from the customs reference price, it will trigger valuation disputes, which will affect the progress of the VAT refund declaration. Prepare documents such as original equipment purchase invoices, depreciation schedules, and third-party valuation reports in advance to ensure the reasonableness of the declared price.
If you encounter customs valuation doubts, provide the above documents in time to defend yourself, avoid being identified as illegal due to false price declaration, which will cause goods detained by customs, and at the same time affect the enterprise's customs credit rating, and the inspection rate of subsequent export goods will be greatly increased. In addition, pay attention to the HS code classification of used equipment. If the classification is wrong, it may not only lead to incorrect application of VAT refund rates, but also cause customs clearance abnormalities, delaying the time node of the VAT refund declaration.
Evelyn LiYears of service：3Customer Rating：5.0
Cross-border Compliance SupervisorStart a Chat
For the logistics link of used equipment export, focus on cargo right control and transportation safety, which indirectly affects the compliant implementation of VAT refund. If LCL transportation is adopted, ensure that the packaging of the equipment meets the customs inspection requirements, avoid being unable to confirm the equipment status during inspection due to damaged packaging, which will affect the equipment use certificate required for VAT refund. In addition, confirm the free storage period of the port of destination in advance to avoid that the goods cannot be picked up in time after arriving at the port due to the delayed VAT refund process, resulting in detention charges and storage fees.
If abnormal situations such as slotting or overbooking occur, adjust the transportation plan in time and report to the tax department synchronously to avoid exceeding the time limit for VAT refund declaration due to delayed arrival of goods, and unable to enjoy the VAT refund policy. The bill of lading endorsement shall be operated strictly in accordance with the trade terms to ensure the smooth transfer of cargo rights, avoid affecting the collection of foreign exchange due to cargo right disputes, and then trigger the collection inspection in the VAT refund audit.
Linda GaoYears of service：7Customer Rating：5.0
Documentation SupervisorStart a Chat
For exported used equipment that has claimed input VAT deduction, the VAT refund amount shall be calculated according to the FOB price of the exported goods and the corresponding VAT refund rate. For used equipment that has not claimed input VAT deduction, it shall be treated as tax-exempt and shall not declare VAT refund.
If the enterprise confuses the two situations, it will trigger the input VAT verification by the tax authority, resulting in the rejection of the VAT refund declaration, and may even be identified as tax evasion, facing fines and late payment fees. In addition, pay attention to the compliance of cross-border tax structures.
If the export of used equipment involves related-party transactions, ensure that the transaction price conforms to the arm's length principle, avoid being adjusted by the tax authority due to unreasonable transfer pricing, which will affect the calculation of the VAT refund amount. At the same time, the VAT deferral policy can be used to optimize cash flow, no need to advance pay VAT before declaring VAT refund, and carry out the carry-over processing of input VAT after the VAT refund is received.
Eric ZhouYears of service：6Customer Rating：5.0
Senior Manager of Foreign Exchange & Tax RebatesStart a Chat
The compliance of collection and payment for used equipment export is one of the core nodes of the VAT refund audit. Ensure that the amount of foreign exchange received is consistent with the FOB price of the exported goods.
If there is a difference in foreign exchange received, provide a reasonable difference certificate, such as the customer's deduction instructions, quality claim agreements, etc. Otherwise, it will trigger the collection inspection in the VAT refund audit, resulting in the stagnation of the VAT refund process. In addition, conduct compliant collection and payment through the CIPS or SWIFT system, avoid using personal accounts or offshore accounts for collection and payment, otherwise it will be identified as violation of collection and payment regulations, affecting the VAT refund qualification.
If you encounter a delay in receiving foreign exchange, promptly handle the collection and payment delay filing with the tax authority, avoid being revoked of the VAT refund qualification due to overdue collection and payment. At the same time, keep the collection and payment vouchers for record for subsequent audits by the tax authority.
Grace WangYears of service：10Customer Rating：5.0
Senior Foreign Trade ConsultantStart a Chat
The export of used equipment requires attention to the compliance of intellectual property rights and contract terms, avoid affecting the implementation of VAT refund due to legal disputes. If the used equipment involves patents or trademarks, ensure that the export behavior does not infringe the intellectual property rights of third parties, otherwise it may trigger customs intellectual property seizure, resulting in goods unable to be exported on time, and the VAT refund declaration will also be interrupted.
In addition, clearly define the quality status, ownership of the used equipment, and the division of VAT refund responsibilities in the contract, avoid delays in receiving foreign exchange due to customer's quality claims, and then trigger the collection inspection in the VAT refund audit. If you encounter force majeure causing delayed export of goods, collect force majeure certification materials in time, declare VAT refund delay to the tax authority, avoid losing the VAT refund qualification due to overdue declaration. At the same time, keep all contracts, invoices, customs declaration forms and other documents for subsequent legal disputes and VAT refund audits.
Daniel XuYears of service：10Customer Rating：5.0
Director of Import & Export OperationsStart a Chat
During the on-site inspection of used equipment export, focus on cooperating with the customs to confirm the consistency of the equipment's use status, ownership and declaration information. If the equipment has obvious modification or damage marks, prepare modification certificates, maintenance records and other documents in advance to avoid being identified as illegal due to the inconsistency between the declaration information and the actual situation, resulting in goods detained by customs and affecting the VAT refund declaration.
In addition, pay attention to the authenticity of the equipment's seal, ensure that the equipment is not replaced during transportation. If the seal is abnormal, promptly inform the customs and apply for re-inspection. If the customs requires inspection and identification, cooperate with providing technical parameters, equipment instructions and other materials to speed up the identification process, avoid goods being detained at the port due to too long inspection time, resulting in additional costs, and affect the time node of the VAT refund declaration.
Jason WuYears of service：10Customer Rating：5.0
International Logistics & Supply Chain ManagerStart a Chat
The compliance audit of used equipment export VAT refund needs to focus on checking the consistency of the four flows, namely cargo flow, capital flow, invoice flow and contract flow. If the four flows are inconsistent, it will trigger tax investigations, resulting in the suspension of the VAT refund declaration, and may even be revoked of the VAT refund qualification.
Sort out the equipment's purchase contracts, original invoices, export contracts, collection vouchers and other documents in advance to ensure that the information of each document is consistent, including equipment model, quantity, price, trading counterparties, etc. If there is a cross-month declaration, do a good job of the carry-over and declaration connection of input VAT, avoid the VAT refund audit not passing due to incorrect declaration data. In addition, do a good job of document filing, keep all documents related to VAT refund for at least 5 years for subsequent audit checks by the tax authority. If you encounter tax investigations, promptly cooperate with providing relevant documents to speed up the investigation process and ensure the smooth arrival of the VAT refund.
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
The supply chain planning for used equipment export needs to combine VAT refund policies to optimize the cost structure. If the VAT refund amount of used equipment is relatively high, prefer direct shipping options to shorten transportation time, ensure that the VAT refund declaration is implemented in time, and speed up cash flow return.
If the VAT refund amount is relatively low, choose transit transportation options to reduce logistics costs, and optimize inventory linkage strategies to avoid storage costs caused by idle used equipment. In addition, combine CIF/FOB trade term conversion to optimize VAT refund accounting.
If export using CIF terms, deduct freight and insurance premiums from the FOB price to ensure accurate calculation of the VAT refund amount. At the same time, establish a cost actuarial model, comprehensively consider factors such as VAT refund amount, logistics costs, compliance costs and other factors, select the optimal export plan to maximize benefits.