VAT rebates on export products raised
The Ministry of Finance has eased export restrictions for the second time in a week to combat mounting challenges to the mainland's foreign trade.
Value-added tax rebates for certain export products including labour-intensive toys, shoes, hats and furniture were raised to 15 per cent from 13 per cent while some machinery products were fully rebated at 17 per cent, the average export VAT rate.
Industry players and observers said the move would instantly lower exporters' costs, a much-needed relief at a time when the global financial crisis continued to haunt the United States, Europe and Japan, the top three consumers of Chinese-made products.
'Very good, very good,' Toys Manufacturers' Association of Hong Kong executive vice-president Yeung Chi-kong said of the 2 percentage point rise in the VAT rebate for his industry. 'The higher the VAT rebate, the lower our costs.'
He added that overseas orders had started flowing in during the past month after being 'very sluggish' in March and April. 'Consumer confidence in the US and Europe appears to have stabilised and orders are picking up fast,' Mr Yeung said.
The VAT rebates on sewing machines and television-related transmission equipment were raised 3 percentage points to 17 per cent, or VAT-free.
Labour-intensive industries benefited, with VAT rebates on shoes, furniture, hats, umbrellas and suitcases raised by 2 percentage points to 15 per cent, while that for glassware was 2 percentage points higher at 13 per cent.
Some seafood products had VAT rebates increased to 13 per cent from 5 per cent, while those for steel and related products were to raised 9 per cent from 5 per cent.
The rebates involve 2,600 types of products and are dated from June 1.
KPMG senior partner Peter Kung said the relaxed fiscal policy would help exporters, particularly the estimated 55,200 Hong Kong processing trade factory owners across the border that have been grappling with the severe export downturn.