On April 28, the Ministry of Finance and the State Administration of Taxation issued the Announcement of the Ministry of Finance and the State Administration of Taxation on the Abolition of Tax Rebates for Export of Certain Iron and Steel Products (hereinafter referred to as the Announcement). Starting from May 1, 2021, the tax rebates for export of certain steel products will be cancelled. At the same time, the Tariff Commission of the State Council issued a notice, starting from May 1, 2021, to adjust the tariffs of some steel products.
The abolition of export tax rebates involves 146 tax codes for steel products, while 23 tax codes for products with high value-added and high-tech content are retained. Take China’s annual export of steel of 53.677 million tons in 2020 as an example. Before the adjustment, about 95% of the export volume (51.11 million tons) adopted the export rebate rate of 13%. After the adjustment, about 25%(13.58 million tons) of export tax rebates will be retained, while the remaining 70%(37.53 million tons) will be cancelled.
At the same time, we adjusted tariffs on some iron and steel products, and implemented zero-import provisional tariff rates on pig iron, crude steel, recycled steel raw materials, ferrochrome and other products. We will appropriately raise export tariffs on ferrosilica, ferrochrome and high purity pig iron, and apply the adjusted export tax rate of 25%, provisional export tax rate of 20% and provisional export tax rate of 15% respectively.
China’s iron and steel industry has been to meet domestic demand and support the national economic development as the main goal, and maintain a certain amount of steel products export to participate in international competition. Based on the new development stage, implementing the new development concept and building a new development pattern, the state has adjusted the import and export tax policies of some steel products. As a policy combination to curb the rapid rise of iron ore prices, control production capacity and reduce production, it is a strategic choice made by the state after the overall balance and a new requirement for the new development stage. In the context of “carbon peak, carbon neutral”, facing the new situation of domestic market demand growth, resource and environment constraints, and green development requirements, the adjustment of steel import and export policy highlights the national policy orientation.
First, it is beneficial to increase the import of iron resources. Temporary zero-import tariff rate will be applied to pig iron, crude steel and recycled steel raw materials. Appropriately raising export tariffs on ferrosilica, ferrochrome and other products will help to reduce the import costs of primary products. Imports of these products are expected to increase in the future, helping to reduce reliance on imported iron ore.
Second, to improve the domestic iron and steel supply and demand relationship. The cancellation of tax rebates for general steel products as many as 146, the 2020 export volume of 37.53 million tons, will promote the export of these products back to the domestic market, increase domestic supply and help improve the relationship between domestic steel supply and demand. This also released to the steel industry to restrict the general steel export signal, prompt steel enterprises to take a foothold in the domestic market.
Post time: Oct-12-2021