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Tariff Rebate Cut
China's Ministry of Finance said, starting July 1, the country would cut or eliminate export tax rebates for 2,831 commodities representing 37 percent of the total number of items listed on customs tax regulations.
Published units -- the Ministry of Finance, the State Administration of Taxation
Published symbol --[fiscal] [2007] 90
Date Published -- 2007 -06-19

Analysis

 
Tax rebate cut as rebalancing act
The massive cut or elimination of tax rebates for exports just announced by China marks a bold move to reengineer the Chinese economy away from its reliance on exports for growth.
US, don't wreck bilateral relations with tariffs
A robust US economy will serve the best interests of China while further Chinese economic growth will continue to make China the fastest growing export market of the US.

Impacts

 
Gov't to maintain restraints on steel exports
Steel exports begin to slow down in May
Steel exports soar 43.56% in June
Tax rebate deadline looms
China exporters rush to beat rebate cuts
 

Yuan likely to be more flexible
Shares fall on tax rebate cut
Calls for RMB rise a move to slow China's expansion
Textiles see declining profits due to adjusted tax rebate
China textiles hit
Textile profit shrinks on tax rebate slash
Rebate cut changes textile export strategy

Statistics
Trade surplus to exceed US$250b in 2007
China-EU trade hits US$272.3 billion in 2006
Europe's trade gap with China grows 33%
Imports to hit $1 trillion by 2010
1st-half surplus to top $100b
Monthly trade surplus soars to record $26.9b
China unveils US$32.6b hi-tech purchases from U.S
Service trade deficit down 3.9%
New, high-tech products trade grows 21%
China imports 14.7% more synthetic rubber
Textile exports up 17% in 1st half
Rebate cuts bite into textiles and paper exports growth

A tariff is a tax on imported goods. When a ship arrives in port a customs officer inspects the contents and charges a tax according to the tariff formula. Since the goods cannot be landed until the tax is paid it is the easiest tax to collect, and the cost of collection is small. Smugglers of course seek to evade the tariff.

More about Tariff

Development of China's tax rebates policies
1985-04-01: Implemented the export tax rebates policy
1994-01: Reformed tax rebates management method
Slashed tax rebates in 1996: product tax to 3% from 11%; value-added tax to 6% from 13%; and consumption tax to 9% from 17%
1998: General tax rebates rate for export goods were raised to 15% from 6% previously
2002: Implemented an export tax rebates management method of tax exemption, tax reduction and tax reimbursement for production enterprises exporting their self-made goods.
2003: Adjusted tax rebates to 12.51% from 15.5%
2006-01-01: Eliminated tax rebates for many leather items used as raw materials and cut tax rebates for other products.
2006-09-15: Reduced tax rebates for steel, some non-ferrous metals, textiles and furniture, raised the export rebate rate for major technical equipment, some IT, biological and medical products and high-tech products as well as processed farm produce
2007-04-15: Scrapped export rebates on 83 steel products while lowering the rate on 76 others

 


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