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Export enterprises to profit from adjustments in tax rebates
04
Aug '08
The Ministry of Finance, State Administration of Taxation, recently issued a circular announcing the adjustment of export tax rebate rate on textiles, pesticides and other commodity products with effect from August 1, 2008.

The ordinance released declared an increase in export tax rebate rate on part of textiles and clothing from 11 to 13 percent. Besides those on bamboo products were also raised to 11 percent.

In fact, it has to be noted that for every one percentage point increase in export tax rebate rate, a equivalent corresponding percentage will be generated by way of growth in profits. It is therefore bound to bring in a direct and swift positive influence for businesses.

Statistics show that in 2007, domestic textile and apparel exports amounted to US $167.9 billion, of which general trade accounted for 70 percent. When calculated at a rate of 10 percent in growth rate, total exports of textiles and garments for the year 2008 is estimated to reach $184.7 billion, of which, general trade exports many reach $130 billion.

As such, a 2 percentage point increase in export tax rebate rates will fetch an additional profit of $2.6 billion to the textile industry. Based on the conversion level of the current exchange rate, corporate profits are expected to soar by 17.69 billion yuan.

Cumulative profits of the textile industry in the past five years have recorded a double digit sales growth. In 2006-07, increase in both total annual profits and operating income exceeded 20 percent. Besides, in the first five months of 2008, an increase of 8.37 percent was registered in profits of the textile industry while growth in sales revenue touched 17.38 percent. Assuming a 10 percent rise, sales income of the sector in 2008 will come to 3.2143 trillion yuan while profits will reach 127.6 billion yuan.

It hoped that with these crucial adjustments, the textile and garment industry of China would be able to remain firm in the international market against the stiff competition from other countries across the world.

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