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Reduction in export tax rebate on textiles may lower profits
02
Sep '11
Any reduction in export tax rebate on textiles is likely to result in lower profit margins and decreasing bargaining capacity of exporters.

Currently, textile exporters in China enjoy a 16 percent export drawback facility. So, if an exporting firm does not earn any profit on the textiles exported by it, then also it can make a profit of 16 percent, which it gets back as tax rebate. Hence, the reduction in tax rebate would automatically lower the profitability of exporters.

However, overseas buyers also bargain for a pie of the rebate enjoyed by textile exporters. Hence, the reduction in tax rebate would also affect the bargaining ability.

Fibre2fashion News Desk - China


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