Export rebate rates unlikely to increase – Ministry of Commerce

19 Jun '08

2 min read

Foreign trade enterprises have been expecting an increase in export tax rebate but the decision of the Ministry of Commerce may leave them with nothing more than disappointment.

Li Rongcan, Financial Secretary in the Ministry of Commerce recently made an announcement at the General Assembly of Import and Export Chamber of Commerce of Chinese Medicine Health Products. He clearly stated that the Ministry of Finance, State Administration of Taxation and other related ministries would have to maintain a stability in export tax rebate policy and that there shall be no new motion towards any change in rebate taxes for the time being.

Starting from July last year, China had made a series of adjustments in export tax rebate policy of some commodities. As a result, large number of enterprises lost about 2.01 percent in profits. Therefore, a further change in policies is an unlikely proposition. It is high time that there be stability in tax policies to avoid unnecessary complexity and hassles.

Foreign trade enterprises especially engaged in textiles and depending on meager profits must take this as a wake up call from the Government.

There have been speculations that the State may introduce support policies for the textile enterprises which may include increase in export tax rebate from 2 to 4 percent.

In 2007, average rate of sales profit of the industry was about 3.97 percent; in the first two months of this year it was only 3.4 percent. Experts have estimated that with an increase of 2 percent in export tax rebate, profit margins of the textile industry would increase by 0.6 percentage points.

However, Li Rongcan disclosed that the future work of the Ministry of Commerce would focus on proper control of RMB appreciation rate, enhancing supervision of anomaly inflow of foreign exchange, introducing and implementing scale control measures on settlement of advance payment of exports, delayed payment of foreign exchange, as well as expanding of imports.

Fibre2fashion News Desk - China

More Textiles News - China...