BEIJING authorities are to further reduce the export tax rebate rate to three per cent in the next two years.
But the move has intensified the conflict between tax authorities and the Foreign Trade Ministry over export incentives.
Tax officials say the cut will discourage tax fraud, but the trade ministry is worried the reduction will further weaken exports.
China recorded its second consecutive monthly trade deficit in January, with imports surging 55.7 per cent compared with January last year, while exports dipped 0.1 per cent to US$9.17 billion (HK$71 billion).
Rebates were cut twice last year after tax officials found many exporters had reported inflated export figures to gain larger tax rebates.
The rebates now average 8.26 per cent compared with 12.86 per cent in the second half of 1995, and 17 per cent in 1994.
'We want to lower the tax rebate rate to a point that exporters no longer have the incentive to make fraudulent tax rebate claims,' an economic official said.