VAT and duties changes for China's steel industry
The Ministry of Finance and the State Administration of Taxation jointly issued on April 26th, the Announcement [2021] No. 16, “On the Cancellation of Export VAT refund for Certain Steel Products” starting from May 1st, 2021.
The implementation of the new policy will increase the production cost for Chinese exporters and consequently raise the price of steel products in the international markets. The cancellation will affect goods belonging to 146 different items classified in HS chapters 72 (Iron and Steel) and 73 (Articles of Iron and Steel).
The complete list of items interested in the cancellation of the export VAT refund is available here.
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In addition, on April 27th, the Customs Tariff Commission of the State Council issued the Announcement [2021] No. 4 “On Adjusting the Tariff of Certain Steel Products”, which will guarantee a better supply of steel materials by reducing the import duty rates of certain steel products starting from May 1st, 2021.
In particular, the import duty rate for iron raw materials and recycled steel is lowered to a provisional rate of 0%
The complete list of the adjusted duty rates is available here.
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In 2020, China exported USD 33.4 billion of iron and steel materials and USD 71.1 billion of articles made in iron and steel, accounting together for more than 4% of the total exports. In the same period, the import of iron and steel materials amount to USD 36.2 billion, while the import of articles in iron and steel totaled USD 9.5 billion, accounting together for 2.3% of total imports.
China imports and exports of iron, steel, and articles thereof in 2020
HS Chapter 72
Iron and steel : Exports 33.4 Billion USD / Imports 36.8 Billion USD
HS Chapter 73
Articles of iron or steel : Exports 71.1 Billion USD / Imports 9.5 Billion USD
Chapter 72 + Chapter 73 : Exports 104.5 Billion USD / Imports 46.3 Billion USD
Percentage of annual trade : Exports 4% and Imports 2.3%
Source: General Administration of Customs of China