China's central government will take charge of paying the entire rebate for companies taxed on export sales from this year, the cabinet said on Tuesday, to unify the rebate system and help dispel trading partners' suspicions of unfair competition. Previously, 7.5 percent of rebates were paid by local governments. Some trading partners, however, suspected local governments were paying more, to effectively subsidise companies in their regions and boost their competitiveness.
"This reform help reduce imbalanced tax rebate payments of different localities and create a unified national market so as to promote foreign trade and the economy," the official Xinhua news agency reported. Local governments will calculate the amount of export rebates they paid out in 2014, and provide that amount to the central government to cover rebate payments this year, the State Council said in a statement on the official government website www.gov.cn. Channelling all payments through central government accounts could help reduce some doubts over the size of rebates received by China's exporters.