Eligibility of Export Goods Under the Incoming Materials Processing Mode for Export Tax Refund Application Under Current Policies?
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My factory is located in the Pearl River Delta, and I have been engaged in incoming materials processing of home hardware accessories for European and American clients for nearly 7 years. I have long heard from peers that no tax refund applies to incoming materials processing, but a familiar peer told me last month that new rules released in 2026 allow tax refund for certain categories of incoming materials processing. Last month, I just shipped 3 containers of custom handles to Germany and received full processing fees paid by the foreign client.
The customs processing manual for my current incoming materials processing business is nearly finished with the verification and write-off process. Now I am worried that applying for tax refund arbitrarily will trigger tax investigation via written inquiry, and also worried that failing to apply for refund when meeting the eligibility will cause an unnecessary loss of more than 100,000 RMB in tax refunds. I want to clearly confirm whether incoming materials processing is eligible for export tax refund, and if my batch of goods can be declared normally.
JohnYears of service：6Customer Rating：5.0
Export Tax Rebate AdvisorStart a Chat
First of all，a widespread misconception needs to be clarified: not all incoming materials processing businesses are completely excluded from export tax refund. New rules implemented in 2026 have opened tax refund access for certain encouraged categories，while other categories still follow the original rule of tax exemption without refund.
In the pre-document verification stage，four core types of materials need to be checked one by one in advance: the product classification recorded in the customs filing manual for incoming materials processing，the import declaration form information for incoming materials supplied free of charge by the foreign client，the export declaration form data of finished products，and the cross-border foreign exchange receipt voucher for processing fees. The product name，quantity，and foreign exchange receipt amount of the four types of materials must be fully consistent without any logical conflict.
At the core process connection node，complete the pre-verification and write-off check of the incoming materials processing manual on the China International Trade Single Window first. After confirming that customs data has been synchronized to the tax system，enter the export tax refund declaration system to input corresponding data. Do not skip the pre-write-off step and submit the application directly. For encouraged categories of incoming materials processing that fall into the high-end home hardware scope，the normal "exemption，credit and refund" policy applies，while ordinary low value-added incoming materials processing categories can only enjoy the tax exemption policy.
For abnormal response plans，if the system pops up a prompt that the manual information is not synchronized during application，directly submit a manual data synchronization application on the Single Window，and the data update can be completed within 2 working days，no need to delete the original declaration data directly. For final compliant implementation，the date of the processing fee foreign exchange receipt voucher must fall within the 90-day validity period after the export date of the finished products，all leftover material disposal vouchers must be separately filed and retained for 3 years for future reference. Submit the formal declaration only after no doubt is fed back from the pre-declaration process.
OliviaYears of service：5Customer Rating：5.0
Senior Customs AdvisorStart a Chat
The filing information of the incoming materials processing manual must fully correspond to the HS code classification of exported finished products. If hardware accessories are incorrectly classified as ordinary metal products during filing, even if the actual subsequent goods belong to the encouraged categories, the tax refund matching rule cannot be triggered. Before applying for tax refund, you can submit a classification correction application to customs, and provide product process descriptions and material test reports to support the correct classification.
After the classification correction is completed, synchronize data to the tax system, which will not affect the subsequent tax refund review progress. If the previous manual has completed official write-off, you can also apply to the port customs for supplementary issuance of classification statement documents as supporting materials for the tax refund application.
EllaYears of service：10Customer Rating：5.0
Senior Financial AdvisorStart a Chat
The logistics manifest data of incoming materials processing goods must be fully consistent with the customs declaration form data. If the product name on the manifest is incorrectly filled, or the quantity overrun or underrun exceeds the reasonable threshold, the subsequent tax refund declaration will be directly intercepted by the system.
For such issues, you can contact the shipping company to submit a manifest correction application within 7 days after the goods leave the port, and submit an overrun/underrun statement to the customs export division at the same time. After the manifest and customs declaration data are aligned, proceed with the subsequent tax refund process. For direct vessels on some near-sea routes, the free demurrage period can be applied to extend to 14 days, to avoid extra container detention costs caused by subsequent document modification.
AlexanderYears of service：10Customer Rating：5.0
Senior Trade AdvisorStart a Chat
The receipt and payment of processing fees for incoming materials processing falls into the category of cross-border trade in services. Eligible enterprises can apply for VAT deferral operation, which means no need to pay import value-added tax in advance when importing materials supplied free of charge by foreign clients, reducing the working capital occupation of enterprises.
It should be noted that the processing fee pricing must not deviate significantly from the average processing fee range of the same category in the same industry, to avoid being judged as abnormal related party transaction pricing and triggering anti-avoidance investigation. Enterprises that keep processing fee transaction vouchers of the same category in the past 12 months can smoothly pass the pricing rationality verification.
EmilyYears of service：3Customer Rating：5.0
Client Success AdvisorStart a Chat
For foreign exchange receipt of processing fees for incoming materials processing, you must accurately select the transaction code of "incoming materials processing processing fee" in the cross-border receipt and payment declaration system. Do not incorrectly select the general trade goods payment, otherwise the subsequent foreign exchange administration monitoring system will mark the data as abnormal, which will be synchronously transmitted to the tax end and affect tax refund review.
If you receive payment through the CIPS cross-border RMB system, make sure to keep the complete message voucher and confirm that the transaction remark is clearly marked. During subsequent document filing, directly submit the screenshot of this message to complete foreign exchange receipt verification, no additional supporting materials are required.
RobertYears of service：6Customer Rating：5.0
Warehouse Management AdvisorStart a Chat
The foreign client's entrusted processing agreement for incoming materials processing business must clearly specify the core clauses that materials are supplied free of charge by the foreign client and our party only collects processing fees. Vague expressions such as "the ownership of goods is transferred to the processor in advance" must not appear, to avoid affecting tax refund eligibility confirmation when subsequent goods ownership disputes occur.
If the agreement involves intellectual property authorization clauses, complete the corresponding intellectual property customs protection filing in advance, to avoid triggering abnormal intellectual property inspection during export which will slow down the overall customs clearance and subsequent tax refund progress.
CharlotteYears of service：4Customer Rating：5.0
Currency Exchange AdvisorStart a Chat
If on-site customs inspection occurs when exporting incoming materials processing goods, prepare the detailed list of incoming materials supplied by the foreign client and the processing flow description of corresponding finished products in advance, and cooperate with customs officers to verify the consistency between actual goods and declared information.
If the goods are judged to have classification doubts during machine inspection, do not directly apply for laboratory test. First show the pre-classification decision document prepared in advance to the on-site customs officer, more than 90% of classification doubts can be clarified directly on site, avoiding the several-week waiting period for laboratory test that will affect the subsequent tax refund declaration cycle.
DavidYears of service：3Customer Rating：5.0
Business Development AdvisorStart a Chat
If the metal hardware accessories involved in incoming materials processing need to go through hazard identification screening, contact a third-party testing institution in advance to issue the MSDS report. After confirming that the products do not belong to the dangerous goods category, submit the report together with other documents during export customs declaration, to avoid being judged as dangerous goods by the shipping company in the subsequent transportation link and charged extra transportation fees.
The product packaging scheme must meet the moisture-proof and reinforcement standards for general goods export. Keep the photos of each batch of product packaging in archive, which can be directly submitted as supporting materials during the subsequent document filing stage.
DanielYears of service：8Customer Rating：5.0
Legal AdvisorStart a Chat
Before submitting tax refund declaration for incoming materials processing, complete the four-flow consistency verification first, to ensure all information of contract flow, goods flow, capital flow, and document flow is fully matched. If you are asked about material ownership during the tax investigation via written inquiry, directly submit the import declaration form of materials supplied free of charge by the foreign client as supporting document, no additional materials are required.
If data doubts appear in the pre-declaration stage, go back to adjust corresponding field information and resubmit, do not force to skip the doubts and submit the formal declaration, otherwise the tax refund review cycle will be extended for at least 3 months.