On 18th June China’s finance ministry announced it would be cutting tax rebates on more than 2800 export items, including bicycles and bike parts. The rebate cuts take force on 1st July.
The Chinese tax rebate system was created in the 1980s to encourage foreign investment in its export sector by offering to refund a percentage of taxes paid by exporting businesses.
Bike makers have been benefitting from a 17 per cent refund on VAT for bicycles. Parts makers got less, 13 per cent. Both will now get 9 per cent rebate.
Importers may now raise their prices to consumers by a commensurate amount.
There’s lots of background info at People’s Daily Online.
The pic above shows the Chinese finance minister, taken from the Chinese-language website devoted to the stimulating topic of Chinese government taxation policies. Click here to access the site. Don’t all rush off at once.