April 21, 2011

 

China to suspend VAT discounts for corn processing mills

 

 

China will suspend VAT discount policies for corn processing mills in a bid to place checks on excessive development of the sector, the Ministry of Finance announced in a circular on Tuesday (Apr 19).

 

The circular said that from April 20 to June 30, tax payers that buy corn from producers for processing anything but fodder shall not be offered farm produce purchase invoice and the input VAT shall not be deducted.

 

China's annual corn output has maintained at 151-153 million tonnes in 2006-10, while demand has been increasing steadily by 4-8% annually in that period (except 2008). The country's corn consumption in 2010 stood at more than 162 million tonnes, and continued to overtake production for a fourth year running.

 

Meanwhile, corn purchases have been active recently in major producing areas and prices are rising rapidly as farmers' stocks decrease. In early April, average prices held at about RMB2,110 (US$323)/tonne, up 60 yuan/tonne over a month earlier.