China's tax cut will be an emphasis in fiscal and taxation work in 2012. Import tax cut for some commodities, resource tax reform and improving VAT system will affect the nonferrous metal industry. SMM gives analysis as below:
Summary: With regard to import tariff for non-ferrous industry, SMM found that temporary tariff for non-ferrous product has not changed yet. The Ministry of Finance still encourages imports, and export of deep-processed products, while it continues to restrict exports of preliminary products.
Summary: Although the Ministry of Finance encourages fully implementation of resource tax reform in 2012, the actual implementation of resource tax reform on non-ferrous mineral products will meet difficulties since grade of non-ferrous mineral products can not be easily standardized as energy products. Many more detailed classifications are needed to make the reform fairer, such as classification of mineral products and preliminary products. Therefore, non-ferrous mineral products are quite likely to be classified and standardized further in 2012, and the resource tax reform is unlikely cover non-ferrous mineral products.
Summary: Due to long processing chain, tax burden is heavy for non-ferrous producers. Although the existing tax policy will guarantee tax income at central and local governments, the high tax burden will weigh on enterprises. In this context, changing business tax into VAT will be in line with government call to encourage exports of deep-processed products.
As labor costs rose sharply in 2011, enterprises are losing competitiveness gained from previous low labor costs, while the tax reform will reduce tax burden at enterprises and will allow enterprises to have new competitiveness.