CCM: China’s resource tax on fluorite to be levied based on value from July 2016 06-23-2016

In June 2016, China’s fluorite price continues increasing. For instance, the average quoted price of fluorite (CaF2>97%) has now gone up to USD227.66/t (RMB1,500/t). This rebound started in April accordingly.



                                                                                                       Source: Bing


CCM predicts that the fluorite market will maintain this upward trend in the short term. This is mainly because the operating rates of downstream hydrogen fluoride (HF) and aluminium fluoride (AlF3) industries still stand high, at about 60-70%, indicating stable demand. In addition, the continuous rainstorms in southern China have impacted the operation of flotation devices, probably to draw back the production.  


According to CCM’s research, fluorite has been listed in the resource tax reform. From 1 July this year, the resource tax on fluorite will be levied based on value, tax rate at 1-6% (former: tax based on quantity, at USD3.04/t OR RMB20/t). Meanwhile, the basis for taxation will be modified, from “sales volume of raw ore” to “sales of raw ore and ore concentrate (OR raw ore processed products)”.


The resource tax reform will be favourable for domestic fluorite enterprises to ease the pressure, stabilise the prices and gradually get out of the downturn.


Take coal resource tax reform (tax rate: 2-10%, based on value) carried out on 1 Dec., 2014 for example. According to statistics released by the State Administration of Taxation, in 2015, the taxes on domestic coal enterprises were down by USD2.75 billion (RMB18.10 billion) - tax on coal resources on average down by USD0.65/t (RMB4.3/t). The coal enterprises' tax burden rate was reduced from 8.0% to 5.7%.


Meantime, the reform will help encourage enterprises to exploit fairly low grade fluorite and to improve the resource utilisation rate.


“In the supply-side reform context, the de-capacity will force the high energy consumption industries to enter market clearing. The mining industry closely related to such industries will also stay sluggish, so will the mineral prices,” commented an expert to CCM, “At this moment, the advancement of the taxation based on value and the clearing up of varied charging funds, will play a role in easing the pressure and reducing the production costs. Drawbacks to the policy implementation are relatively small.”



 

In addition, the resource tax reform is aimed at establishing a regulated, fair, rationally controlling and high efficiency taxation and supervision mechanism, to give full play to the effects of resource tax, such as economic regulation, intensive utilisation and saving of resources and protection of ecological environment.


Notably, the Chinese government is to completely remove the charging funds, and to enhance the administration on preferential tax policies.


Specifically, the removal of charging funds will:

  • Cut down the mineral compensation expenses of all resource categories to zero, stop levying the price regulation fund, and cancel the local charging funds set up illegally and targeted at minerals
  • Call off all local charging funds related to minerals, however established not in line with government’s regulations or by overstepping the authority


In regard to enhancing the administration on preferential tax policies, it is aimed at improving the comprehensive utilisation rate of minerals by:

  • Reducing the resource tax on minerals exploited through filling-mining method, by 50%, and on minerals exploited from the failure phase mines, by 30%
  • Decreasing or removing the resource taxes (decided by provincial governments themselves) on mineral products extracted from low grade ore, mullock, tailings and residues that are expected to use


This article comes from China Fluoride Materials Monthly Report 1606, CCM




About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

 

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