FX.co ★ China Moves to End Key Tax Break for Gold Retailers

China has announced the immediate termination of a pivotal value-added tax (VAT) offset for certain gold retailers. This new policy, which will remain in place until the end of 2027, is anticipated to significantly reshape the domestic gold market. Under the updated rules, only entities that are members of the Shanghai Gold Exchange and the Shanghai Futures Exchange—predominantly major banks, refineries, and fabricators dealing in gold as investment products—will be eligible for full VAT deductions. Previously, most fabricators were entitled to a 13% VAT deduction on input costs when selling to consumers. However, the new regulation restricts non-member companies to offsetting only 6% of VAT. This change affects jewelry manufacturers, industrial users, and firms that produce investment products like bars and coins, provided they are not exchange members. Authorities have noted that the full impact will be contingent on the specifics of the implementation, but analysts predict this could compress profit margins and place pressure on smaller gold fabricators.