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Chinese VAT Decision On Animal Feed Welcomed In US

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

16 November 2017


China's Ministry of Foreign Affairs has announced that it has been again decided that US distiller's dried grains with solubles (DDGS) should be exempt from the 11 percent value-added tax.

The good is a byproduct of the ethanol alcohol production industry and is used as animal feed. The announcement came following US President Donald Trump's official visit to China, in a package of measures covering several areas of bilateral relations.

Welcoming the decision, Tom Sleight, US Grains Council (USGC) President and CEO, said: "We are pleased to see this move, which we've been working toward for months. This change will immediately improve the competitiveness of US DDGS in what was once our top market, which is a very positive thing."

According to the Grains Council, in January 2016, China's Ministry of Commerce announced it would begin anti-dumping and countervailing duty investigations related to US DDGS exports to its country. This would look at whether US exporters are selling goods at below US market prices in China or whether producers are receiving unfair subsidies.

Those cases resulted in duties being applied to US DDGS and the ending of an ongoing exemption from paying the VAT, the Council noted, adding: "The combination of the duties and the VAT made US DDGS exports to China even less competitive, affecting market prices and export flows globally."

While the VAT has been removed, the anti-dumping and countervailing duties remain, it said. The Council said it is continuing to work to remedy the dispute.

US DDGS exports to China have fallen from 5.4 million metric tons in 2015 to 3.3 million metric tons in 2016 and to just 739,000 tons so far in 2017.

TAGS: VAT rates | tax | value added tax (VAT) | anti-dumping | China | United States | services | VAT goods & services classification

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