In future, rare earths in China will no longer be taxed according to quantity but according to price. Experts fear thereby a further increase of the illicit trade with the coveted raw materials.
The resource tax is to be massively increased throughout China. According to the will of the government, a tax of 22 per cent of the price is due on light rare earth elements from northern China, and a tax of 35 per cent of the price on heavy rare earth elements from southern China.
The main reason for this reform is China's losses from court proceedings with the World Trade Organization (WTO) and the partial abolition of tariffs on rare earths. On the one hand, Beijing wants to promote the centralization of resources at large manufacturing groups and, on the other hand, limit the export of large quantities of rare earths.
The WTO has decided in 2011 that China's restrictions on the export of nine commodities are in conflict with WTO rules. The raw materials were bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus and zinc. The provisions for the export of rare earths, tungsten and molybdenum were then affected by the same decision.
The tax reform for the rare earths is considered a strategic focus for the regulation of China's resources. "If the rare earths tax is levied not on the amount, but on the price, the market can play a greater role," explains a responsible. "The resource tax rates have long been set by the local governments. In Jiangxi Province, the rare earth tax rate is 36.000 Yuan (about 4700 Euro) per tonne, but in the Guangxi Autonomous Region it is only 6000 Yuan (about 780 Euro) per ton. The reform would make fairer competition in the market fairer. "
The illegal mining and trading of rare earths is widespread in China. Many experts fear that a large increase in resource taxes will further fuel the illicit business of rare earths, as even righteous companies could choose the path to illegality to avoid the high tax burden.
http://german.china.org.cn/business/txt/2014-11/21/content_34116385.htm
