Chinese ferrous scrap industry keenly awaits reintroduction of VAT rebate

BEIJING (Scrap Monster): The Chinese ferrous scrap processors are reported to be eagerly awaiting a positive signal from the authorities to reinstate the Value Added Tax (VAT) rebate on scrap sales, although majority of them are still not hopeful of a favorable action.

The ferrous scrap recyclers in the country had enjoyed 70% rebate on VAT in 2009. The rebate was lowered to 50% in 2010. The following year, the government completely removed the rebate on VAT following notice of abuses. Some scrap processors were found to have failed to keep up the set standards and quality, while others simply evaded the tax system.

Various industry bodies including the China Association of Metal Scrap Utilization (CAMU) had urged the Chinese National Development and Reform Commission (NDRC) to lower the tax rate on steel scrap sales. According to CAMU, the Association has been frequently communicating with Chinese authorities with regards to the issue and it expects announcement of favorable policies that may benefit the steel scrap recycling sector.

Other industrial associations such as China National Ship Recycling Association have also been pressing for reinstatement of discount on higher tax.