Processing companies call for VAT abolishment

SteelOrbis Shanghai Mr. Qi Xiangdong, deputy secretary-general of State Council disclosed that fourteen steel companies applied to ask for the abolishment of the VAT on steel used by export oriented processing and trading companies. The State Council is currently considering the issue and no final decision has been made yet. According to the current regulation which came into force in 2005, the processing companies -which hammer the finished steel products such as hot rolled coil into galvanized, for example, and export them- pay VAT for the steel they both import and purchase from the domestic market. Now, the government considers canceling VAT imposed on imported steel products that will be exported by processing and trading companies, but the taxes on domestic steel purchases will remain valid. The government had adopted this policy to reduce high energy consuming and environmentally hazardous steel production in the country.