13 PURCHASE OF SOMESTIC MADE MACHINERY
For FIE purchases domestic made machinery within the approved refund investment limit, it can be refunded of the VAT paid for the machinery. The following conditions must be satisfied:
(I) The enterprises must be in the approved industry;
(2) The machinery is newly one and purchased in China;
(3) The settlement is made by money and not in form of capital contribution;
(4) The machinery must be in the approved refund investment limit i.e. the total investment amount in form of monetary contribution minus the duty and VAT free importation of machinery.

14 TAX ON IMPORTATION
It is generally that the import of goods, no matter it is for self-used or trading; purchase or donation; domestic-made or foreign-made, should be subject to custom duty and VAT unless the materials are imported for some special purpose (e.g. for the contract or import processing for ultimate exportation). There are generally two rates 17% or 13% and the formula is:
VAT payable = (dutiable value + custom duty + consumption tax) x tax rate
(a An import and export company imported some goods which required to pay consumption tax, the purchase cost 1.5 million dollars, related fee 300,000 dollars, transportation and insurance fee for the journey from overseas to China 450,000 dollars. The company also paid 450,000 dollars of custom duty, consumption tax 270,000 dollars. In the same month, the company sold the goods to an enterprise within china for 4,387,500 dollars including VAT. Calculate the value-added tax of importation and domestic sales for the company.
Input VAT tax of importation = (dutiable value + custom duty + consumption tax) x
17%
= [(1,500,000 + 300,000 + 450,000) + 450,000 + 270,000] x 17% = 504,900 dollars
Value added tax of domestic sales = 4,387,500 ¡Â (1 + 17%) x 17% =637,500 dollars
Net VAT payable =637,500 - 504,900 = 132,600 dollars