China cancels import steel tax protection policy

The Chinese Ministry of Finance and the State Tax Administration announced their decision to remove the special tax (confidentiality) policy on certain categories of steel product imports into the country. The solution aims to increase domestic steel use and reduce dependence on imported steel.

In this regard, tariffs and taxes will be introduced on 78 items of imported products, which are also produced domestically. This list also includes products such as steel wire and electrical steel. The new tariffs will be applied starting from July 31 of the current year. However, all orders signed prior to that date for 2014 shipments will be tariff exempt, according to the General Administration of Customs in China.

The country has introduced import tax protection policies to boost foreign trade and increase the use of domestic steel in export markets. Steel products are the country's main import category, accounting for nearly 50 percent of the country's total imports. Hot rolled and cold rolled steel coils account for a significant volume of imported goods.

The decision to abolish the confidentiality tax policy will result in a large number of imported steels losing their advantage over domestically produced steels. In addition, it will help domestic metallurgical companies compete with international enterprises on an equal footing. Given the oversupply of production in China, these measures should ease the financial situation, first of all, of their own companies.