China Boosts Diamond Industry With Tax Incentives

by Mary Swire, Tax-News.com, Hong Kong

25 September 2001

The Chinese government will unveil a new package of tax reforms next month which it hopes will deter smuggling in the diamond industry and promote trade at the country's sole diamond trading centre, the Shanghai diamond exchange.

Director of the Shanghai Economic Commission Huang Gifan has confirmed in the 'China Daily' that the cuts include abolishing the 3 per cent import tariff and lowering the tax rate for diamonds on the domestic market from around 34 per cent to 17 per cent. The consumer tax will also be amended: instead of processors shouldering the tax it will be shifted to retailers but the rate will be cut from 10 per cent to 5 per cent.

'The package has been worked out as a special favour to the exchange in Shanghai,' said Huang. And senior economist at the Shanghai Diamond Exchange Administration, Yang Zude, remarked: 'The new package is a breakthrough in the existing policies guiding domestic diamond trading and will greatly bolster the growth of our exchange.'

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