China Releases New Tax Policies for Cross-Border E-Commerce Export Overseas Warehouses
In a move aimed at enhancing the development of cross-border e-commerce, the State Administration of Taxation (SAT) has announced new regulations designed to streamline the export tax refund process for goods exported through overseas warehouses. These changes, outlined in Announcement No. 3 of 2025, support the growing trend of cross-border e-commerce and provide greater flexibility for businesses using the overseas warehouse model. Below, we break down the key elements of the announcement and its implications for businesses engaged in this form of international trade.
Tax Refund Process for Goods Exported via Overseas Warehouses
The SAT will now allow taxpayers to apply for export tax refunds (or exemptions) once goods are declared and shipped out of the country through overseas warehouses (customs supervision code “9810”). If the goods have already been sold at the time of the application, the standard export tax refund procedures will apply. However, if the goods remain unsold, taxpayers can take advantage of a new “tax refund upon departure” option, which allows them to apply for an export pre-tax refund.
This “pre-tax refund” system is designed to ease cash flow for businesses by allowing them to receive refunds ahead of the actual sale of goods, with a recalculation of sales to follow once the goods are sold.
Application and Documentation Requirements
To apply for the export pre-tax refund, taxpayers must submit a customs declaration form along with supporting documentation. Specific details include:
- Declaring the “Overseas Warehouse Pre-refund” business type (code: HWC-YT) in the tax refund declaration.
- Separating goods that have been sold from those that are unsold, with corresponding declaration processes for each.
- Foreign trade and production enterprises must declare separately, using distinct serial numbers and association numbers as required.
These guidelines are aimed at ensuring clear differentiation between goods that have been sold and those still in stock, enabling a more accurate tax refund process.
Handling Export Pre-Tax Refund Accounting
Taxpayers must finalize the accounting of export pre-tax refunds within each VAT tax declaration period. However, foreign trade enterprises may also apply for refunds outside of the regular VAT period with prior consent from the tax authorities. If the accounting deadline is missed, the tax authorities will recover any pre-tax refunds that have already been processed.
The new policy also outlines procedures for taxpayers when discrepancies arise between the pre-tax refund and the actual sales of goods. These adjustments will be handled via an amended declaration process, with either the refund being recalculated or the pre-tax refund returned in full, depending on the sales situation.
Record-Keeping and Documentation
For tax purposes, businesses exporting through overseas warehouses must maintain detailed records to substantiate their claims for tax refunds. These records include:
- Sales ledgers, invoices, and any other documentation proving the sale of goods.
- In cases where an export pre-tax refund is claimed, businesses must retain these sales documents for verification by tax authorities within 15 days of the sale.
The SAT has emphasized that businesses may choose to store these documents either physically, digitally, or in a mixed format, but they must be accessible for auditing purposes.
Addressing Potential Fraud
The new rules also stress the importance of accurate and truthful declarations. Tax authorities will review all export pre-tax refund claims and ensure that sales documents are authentic. If any discrepancies or fraudulent activities are discovered, the tax refund may be revoked, and businesses could face penalties under the Law of the People’s Republic of China on the Administration of Tax Collection.
Transitional Measures
The announcement also provides a transition period for businesses that have already exported goods via overseas warehouses but have not yet applied for tax refunds. These businesses will need to comply with the new regulations moving forward.
Conclusion
The State Administration of Taxation’s latest announcement marks a significant step in supporting the growth of cross-border e-commerce, particularly for businesses utilizing overseas warehouses. By introducing the export pre-tax refund mechanism, the SAT aims to provide more liquidity and operational flexibility to businesses while simplifying the export tax refund process. However, businesses must ensure they adhere to the detailed application and documentation requirements to take full advantage of these changes.
As always, companies engaging in cross-border trade should consult with tax professionals to ensure compliance with the new rules and optimize their tax strategies.
Author
Dr. Richard van Ostende
Related Articles
China’s Construction Machinery Exports Surge 33.4% in Early 2026
China’s construction machinery sector has started 2026 with strong export momentum, reflecting both cyclical recovery in global infrastructure investment and structural competitiveness gains among Chinese manufacturers. According to official, export value of construction machinery increased by 33.4% in the first two months of the year, signaling robust external demand despite ongoing global economic uncertainties.
Executive Summary
- China’s construction machinery exports grew by 33.4% year-on-year in January–February 2026
- Growth is driven by emerging market demand, infrastructure investment, and competitive pricing
- Chinese manufacturers continue to gain global market share, particularly in Asia, Africa, and Latin America
- The sector benefits from supply chain maturity and cost efficiency
- Export growth partially offsets domestic market softness in real estate-related demand
- The trend reflects China’s broader push toward high-end manufacturing and global industrial positioning
Strong Export Performance Signals External Demand Recovery
The 33.4% increase in export value highlights a significant rebound in overseas demand for construction machinery. This growth comes amid a gradual recovery in global infrastructure investment, particularly in developing economies where demand for cost-effective and reliable equipment remains strong. Chinese manufacturers have positioned themselves competitively by offering a broad portfolio ranging from excavators and loaders to cranes and concrete machinery. The ability to deliver at scale, combined with shorter lead times compared to some international competitors, has contributed to this export expansion.
Emerging Markets Drive Growth Momentum
A key driver behind the surge in exports is the continued demand from emerging markets. Regions across Southeast Asia, the Middle East, Africa, and Latin America are investing in infrastructure development, urbanization, and energy projects. These markets often prioritize affordability and operational reliability, areas where Chinese construction machinery producers have strengthened their value proposition. In addition, China’s long-standing economic engagement through infrastructure initiatives has supported market access and distribution networks for domestic manufacturers, further facilitating export growth.
Competitive Positioning of Chinese Manufacturers
Chinese construction machinery companies have undergone a notable transformation over the past decade. While historically competing primarily on price, many firms have increasingly focused on product quality, technological capabilities, and after-sales service. This shift has enabled leading players to move up the value chain, competing not only in developing markets but also gaining traction in more mature markets. Improvements in digitalization, equipment efficiency, and compliance with international standards have strengthened their global competitiveness.
Domestic Market Conditions Reinforce Export Orientation
The export growth also reflects structural dynamics within China’s domestic market. Demand linked to real estate construction remains under pressure, prompting manufacturers to further expand their international footprint. At the same time, domestic infrastructure investment has provided a degree of baseline demand stability. However, the imbalance between domestic supply capacity and local demand has accelerated the strategic importance of exports as a growth driver.
Policy Environment and Industrial Support
Although the reported export growth is market-driven, it aligns with broader industrial policy objectives set by Chinese authorities. China has consistently emphasized the development of advanced manufacturing and the internationalization of its industrial base. While no specific new policy was highlighted in this particular release, the sector operates within the framework of ongoing initiatives supporting equipment manufacturing, export facilitation, and supply chain resilience. These policies collectively contribute to enhancing the global competitiveness of Chinese machinery producers.
Supply Chain Strength and Cost Advantages
China’s well-established industrial ecosystem continues to provide a significant competitive advantage. The availability of components, integrated supply chains, and manufacturing scale allows producers to maintain cost efficiency while improving product quality. Moreover, logistics capabilities and export infrastructure have supported timely delivery, which is increasingly critical in large-scale infrastructure projects abroad.
Outlook: Sustained Growth with External Risks
Looking ahead, the outlook for construction machinery exports remains positive but subject to external risks. Continued infrastructure investment globally is expected to sustain demand, particularly in developing economies. However, factors such as geopolitical tensions, trade barriers, currency fluctuations, and shifts in global economic growth could influence export performance. In addition, increasing competition from both established international players and emerging local manufacturers in target markets may affect margins and market share.
What This Means for Business
For companies operating in or engaging with China’s construction machinery sector, several implications emerge:
- The sustained export growth underscores the importance of international markets as a core revenue driver. Companies should continue to strengthen their global sales networks, local partnerships, and after-sales service capabilities.
- Competitive dynamics are shifting from price-driven competition to a broader value proposition that includes technology, reliability, and service. Investment in product innovation and digital capabilities will be essential to maintain competitiveness.
- Businesses should closely monitor developments in key export markets, particularly infrastructure investment trends and regulatory environments. Market diversification can help mitigate risks associated with regional volatility.
- Supply chain resilience remains a strategic priority. Companies that can leverage China’s manufacturing ecosystem while managing global logistics effectively will be better positioned to capitalize on continued demand growth.
Sources
https://www.gov.cn/yaowen/liebiao/202603/content_7063817.htm
Author
Dr. Richard van Ostende
Related Articles