The central government will slash the tax refund to exporters by at least three percentage points from next year
The central government has unveiled details of its reduction of the value-added tax (VAT) rebate paid to exporters, and promised to speed up payment of an estimated 300 billion yuan (HK$280.95 billion) in outstanding refunds.
The move, aimed at easing financial pressure on the government and deflecting international criticism of China's allegedly undervalued currency, will negatively affect many mainland exporters.
VAT rebates for exported goods are expected to fall by an average of three percentage points, according to documents issued yesterday by the Ministry of Finance and the State Administration of Taxation. The rebate is as high as 17 per cent, depending on the industry.
The marine vessel, vehicle and engineering equipment industries will escape the cuts, and continue to enjoy a 17 per cent VAT rebate.
The hardest hit segments include raw wood, rare earth concentrate and combed goat wool, which will see their 13 per cent rebate disappear altogether.