CHINA: Recent tax changes for leather may boost foreign trade activity, experts say

China has made wholesale changes to the customs tariffs and VAT rules for the import of semi finished leather and wet blue, in order to boost leather production and encourage exports of finished goods. The amendments, which came into effect in March and were released by CLIA (China Leather Industry Association) are expected to open up opportunities for western tanneries to consolidate and improve their exports to their Chinese counterparts. Business with China collapsed by around 50% between September 2008 and February 2009. "Tanneries wishing to reestablish business links with their former clients and contact  new ones should consider more face-to-face meetings and networking at trade fairs," said Perrine Ardouin, Senior event manager of APLF Ltd, the co-organiser of leather exhibition ACLE in Shanghai.  The fair is  widely considered the most important platform in the mainland for the global leather industry.   "ACLE expects an influx of Chinese buyers every year and this year is no exception," Ardouin noted.  Last year’s event attracted more than 13,000 Chinese buyers. Outlining the main changes, the imports of semi-processed leather such as wet-blue, where it is subsequently converted to finished leather and re-exported, are free from duty and VAT. This is a major change compared with the previous policy where finished leather converted from imported wet-blue had to pay duty and VAT upon entry. There was also no VAT rebate upon export and no drawback on the duty paid. Meanwhile, the ban continues on importing of raw hides, converting them into semi and finished leather, and directly exporting these leathers. Such leathers must be made into finished products for export. The import of raw hides and skins where they are  processed and converted into finished products (such as footwear, bags, garments, etc) and re-exported are free from VAT and duty in 2009 ,with no definite termination date agreed. Previously, this tax-free policy was scheduled to expire on December 31, 2008. New export tax rebates The rebate on leather footwear and bags increased to 13%. Previously it was 11%. This change took effect from December 1, 2008. The rebate on leather and fur apparel and leather gloves will be increased to 13% from April 1, 2009. Previously, it was set at 5%. Source: FashionNetAsia If you wish to contribute to the APLF News, with your experiences in the industry, your observations, or general thoughts on the direction the industry is going, we would like to hear from you. Email: aplf-news@aplf.com Click HERE for more exhibitor and visitor information for APLF events.