Past iadvisory Questions and Answers: China

Over the years, our members have benefitted from getting their overseas expansion related questions answered by our iadvisors on the iadvisory portal. Here are some examples for your reference.

Question: We have a question regarding Value Added Tax (VAT) in China. We import products such as Thumbdrive and recycled bags from China to Singapore. Our suppliers in China included the VAT of 17% in the selling price. We would like to know if it is right for the suppliers in China to do so and what are the ways they can "avoid" paying the VAT? How can the suppliers in China put a formal request to the relevant government authority in China to exclude the VAT?

Answer: There is no export VAT of 17% imposed on China exports in general, although there is a small export VAT percentage levied by the Chinese Govt on textiles and garments of specific nature to the US for export control purposes. Import VAT of 17% applies to all goods in general except those under some special Government schemes. It seems that the suppliers are attempting to recover the import VAT that they may have paid for imported raw materials through their pricing to you. It is not at all common for China suppliers/exporters to include the VAT of 17% as a separate price element. In fact, the suppliers/exporters can get back the 17% VAT that has been paid on importation of raw materials from the China tax bureau after the finished goods are exported with evidence of formal export customs declarations.

Question: We are a Singapore company hiring a Chinese National under Singapore employment pass. He will spend most of his time working in China. Are there any Singapore or China obligations we need to take note of for this employee?

Answer: This involves Employment Policies and Tax Policies in and between the two countries. This Chinese national is an 'expat' in Singapore sent to work in China. If he is practically working out of China, depending on the number of days overseas, you need to check his personal tax status for Singapore Income tax. Other than that, I don't think there is much more to worry about from the Singapore side. However, if he is fully an employee of a Singapore company and work over 180 days in China, he could be subject to 'foreigner' income tax in China. It will be advisable to consult a tax consultant on cross border personal taxation.

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