April 5, 2004

China Abolishes Tax On Imported Wheat
 
The Chinese government has exempted imported wheat from value added tax in an attempt to lower import costs and ease rising domestic grain prices, local traders said Friday.
 
It is unclear how long the exemption will remain in effect.
 
Officials from the China State Development and Reform Commission, or SDRC, the highest policy making body on grain imports, weren't available for comment.
 
Normally, wheat importers in China have to pay a 13% value added tax on imported wheat.
 
Since late 2003, China has bought nearly 5 million metric tons of wheat from the United States, Australia and Canada, after local grain prices rose sharply on concerns about dwindling grain stocks and a poor harvest this season.
 
Most of the imported wheat is expected to go into replenishing depleted state reserves, said a wheat trader from China National Cereals, Oils and Foodstuffs Import and Export Corp., or Cofco, the only state authorized wheat importer.
 
As such, imported wheat that will replenish state reserves will mostly come in without having to pay VAT, added the trader.
 
In 2004, China has set the low tariff rate quota for wheat imports at 9.636 million tons, with 90% of it reserved for state-owned companies, according to a government notice.