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| RAISING TAX IN REAL TERM (CHINA) |
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CHINA
RAISING TAX IN REAL TERM
Review Tax Refund system on 40% export items
Express a stance to reduce Trade Surplus
Beijing announced on June 19 to take the bold course of raising Tax in
real term starting July 01, 2007 on some 40% of whole export items. In
real, Increased Value Tax, a kind of VAT having been refunded so far, shall
be reduced or swept away. Such a large-scale adjustment is really an exception
to show a strong posture of the government aiming to reduce Trade Surplus.
In spite of actual removal of refunding Increased Value Tax being so far
applied to a limited items such as Steel Products, expansion of trade surplus
did not come to a halt to draw criticism from the States and other countries.
Those Foreign-Capital-Affiliated having their base of export in China will
be affected by such new governmental arrangement.
Rate of the prevailing Increased Value Tax is 17% and the tax has been
so far refunded partially or its whole at the time of exportation to promote
export from the country. The intended items of the review this time go
for 2,831, or 37% of whole exported items.
Out of those, 553 particular items such as fertilizer, dyestuff, leather
and so on requiring high energy consumption and easy to cause environmental
pollution, the refund will be swept away completely.
For 2,200 plus items “having a potentiality of causing trade conflict”
such as a part of steel, textiles, shoes, toys, paperware, vegetable oil,
two-wheeler and so on, rate of refund shall be lowered.
Chinese trade surplus increased $85.7 billion during January-May period
this year, which is 83% increase comparing to the same period of previous
year.
NOTE to the Article:
Air Conditioner manufactures in China so far enjoyed a refund of 13% at
the time of exportation so far while, by this Governmental policy, the
refund rate shall be reduced to 9% starting July 01, 2007. Such reduction
shall, thus, force those manufacturers raise production cost inevitably.
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