VAT Reductions: Coming Soon to a Steel Product Near You

Tuesday, February 6, 2007 3:22
Comments Off on VAT Reductions: Coming Soon to a Steel Product Near You

As we announced several months ago in a September post entitled VAT Rebate Scheme to Change, low value manufacturers were going to begin seeing a change in the amount of money the Chinese government would kick back.

The provided table at that time was all in Chinese, but for those who knew their harmonic code, they were able to perform a simple search to see what effect the new rules would have.

The response from a good friend of mine working in the metals trading said it all:

We have been following this for a number of months and believed our metals generally would have their rebate lowered from 13% to 11%. It was a surprise that it dropped all the way to 0%. I think they did what they did last year with the currency revaluation – say it will happen slowly and then make it jump like a fat piggie out of a barn window.

Fortunately for my friend, and anyone else working with low end steel products, the pig was given a short reprieve and the expected December deadline passed with most products unaffected (most likely due to Chinese manufacturers pushing back).

Unfortunately though, with reports in Reuters it looks as if the WTO complaint lodged by the U.S. against China has brought this issue back to the front burner.

So, for those companies who are manufacturing low end steel components from China, or are just now looking to do so, begin calculating your costs as if any VAT you receive from this day to that is gravy.

For those in copper… you may be next

Both comments and pings are currently closed.