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Iron mining taxes to be reduced by 60 percent
publisherLandy Lu
time2015/07/14
- Iron mining taxes to be reduced by 60 percent
China announced on Wednesday a major reduction of taxes on iron ore to help the struggling metals industry and ensure the security of national resources.
The weekly State Council executive meeting, presided over by Premier Li Keqiang, decided toreduce the resource tax on iron ore by 60 percent, effective May 1.
The move aims to improve the operations of mining companies, promote structural adjustments,support the coordinated development and upgrading of related industries, and safeguard thesecurity of ore supplies, according to a news release issued after the meeting.
It came on the same day that Shanghai Securities News said on its website that the government would soon announce policies to support the iron ore mining sector. Although the report did notgive clear sources or other details, domestic stocks related to iron ore mining and steel production surged on speculation.
China, the world's biggest steel producer, has been heavily dependent on low-cost foreign ore.According to the China Iron and Steel Association, the country's imports last year rose 9.7 percentage points to 78.5 percent of total ore.
Many Chinese mines have been forced to close as global iron ore prices have fallen about 60 percent in the past year.
Li Xinchuang, deputy secretary-general of the China Iron and Steel Association, said the currenttax rate on Chinese iron ore operations is 30 percent, much higher than the burden abroad,which mainly ranges from 4 or 5 percent to 10 percent.
"It's very unreasonable, given the collapsed prices. The new tax rate will greatly reduce theburden on the sector," he said. Still, he said, in light of the complex business environment, mining enterprises cannot depend on policies alone but must lower their costs and upgrade theirtechnology to make themselves more competitive.
Xu Xiangchun, a senior analyst with Mysteel, a Shanghai-based steel information consultancy,said the challenges in the sector are very tough, with many large mining companies suffering losses or even closing.
"So the new tax rate has great significance, not only in terms of stabilizing the sector but also insafeguarding national resource security," Xu said.
The executive meeting also stressed the need to make structural tax reductions and cut feesacross the board to further lighten the burden on enterprises, particularly small and microbusinesses, to encourage innovation.
It was decided that half a year would be spent reviewing administrative charges that enterprisesare required to pay the government, as well as the compulsory service charges and fees chargedby industry associations and chambers of commerce nationwide.
The role of government would be reviewed, and rules and mechanisms would be set up toregulate charges and cancel unreasonable ones, it was decided.
The weekly State Council executive meeting, presided over by Premier Li Keqiang, decided toreduce the resource tax on iron ore by 60 percent, effective May 1.
The move aims to improve the operations of mining companies, promote structural adjustments,support the coordinated development and upgrading of related industries, and safeguard thesecurity of ore supplies, according to a news release issued after the meeting.
It came on the same day that Shanghai Securities News said on its website that the government would soon announce policies to support the iron ore mining sector. Although the report did notgive clear sources or other details, domestic stocks related to iron ore mining and steel production surged on speculation.
China, the world's biggest steel producer, has been heavily dependent on low-cost foreign ore.According to the China Iron and Steel Association, the country's imports last year rose 9.7 percentage points to 78.5 percent of total ore.
Many Chinese mines have been forced to close as global iron ore prices have fallen about 60 percent in the past year.
Li Xinchuang, deputy secretary-general of the China Iron and Steel Association, said the currenttax rate on Chinese iron ore operations is 30 percent, much higher than the burden abroad,which mainly ranges from 4 or 5 percent to 10 percent.
"It's very unreasonable, given the collapsed prices. The new tax rate will greatly reduce theburden on the sector," he said. Still, he said, in light of the complex business environment, mining enterprises cannot depend on policies alone but must lower their costs and upgrade theirtechnology to make themselves more competitive.
Xu Xiangchun, a senior analyst with Mysteel, a Shanghai-based steel information consultancy,said the challenges in the sector are very tough, with many large mining companies suffering losses or even closing.
"So the new tax rate has great significance, not only in terms of stabilizing the sector but also insafeguarding national resource security," Xu said.
The executive meeting also stressed the need to make structural tax reductions and cut feesacross the board to further lighten the burden on enterprises, particularly small and microbusinesses, to encourage innovation.
It was decided that half a year would be spent reviewing administrative charges that enterprisesare required to pay the government, as well as the compulsory service charges and fees chargedby industry associations and chambers of commerce nationwide.
The role of government would be reviewed, and rules and mechanisms would be set up toregulate charges and cancel unreasonable ones, it was decided.