Beijing has drastically cut value added tax on more than 600 export items in an effort to mitigate the impact of the global economic downturn, reports China Daily.
"The tax incentives have been effective in the last few months," said Shanghai Securities analyst Li Jianfeng. "Export volumes of some labour-intensive products have started to pick up on a month-to-month basis and the decline in overall trade has slowed recently."
The Ministry of Finance has announced that it has increased value tax rebates by 5 to 17 percent on export products, including ethanol, toys and sewing machines applicable since June 1.
The tax rebate scheme allows exporters to recoup part or all of the money paid in value added tax, and the latest round of rebates ends taxation on certain products, such as sewing machines and television transmission equipment.
This is the seventh time that the government has raised tax rebates for exporters since last August, when overseas demand began to shrink.
In the first four months this year, exports dropped 20.5 percent from a year earlier to US$337.4 billion, while imports plunged 28.7 percent to US$261.99 billion.
Tracey Jia
