Chinese officials consider scrapping gold jewellery tax

Authorities in China are reportedly investigating the possibility of scrapping the five per cent consumption tax on gold jewellery.

The proposals, put forward by the China Gold Association, could provide a welcome boost to the nation's gold processing industry, China Daily reports.

The proposals were drawn up following an investigation into gold processing enterprises and gold jewellery traders in major processing areas and big gold jewellery consuming cities.

The State Administration of Taxation received the proposals last November and has reportedly attached great importance to the issue, delivering it to the State Council, China's cabinet.

China Gold Association Vice-Secretary-General Xu Shouxin said: 'The consumption tax on gold jewellery should be scrapped, to further the development of the industry.”

Statistics show that the profit margin in the gold jewellery sector is less than two per cent, compared with a gross profit of as high as 30 to 40 per cent for diamond and gem products. Scrapping the consumption tax would allow gold jewellery processing enterprises to earn higher profits and improve their designing and manufacturing technology.

China began to levy a ten per cent consumption tax on gold jewellery in 1993. The tax was reduced to five per cent and transferred from consumers to retailers in 1994. The central government began to speed up its reform of the gold market management system in 2001, establishing the Shanghai Gold Exchange in 2002 and abolishing more than 100 administrative approval procedures in 2003.