Rubber Products and Pesticide Sectors Set to Benefit from Tax Break     

The Ministry of Finance and the State Administration of Taxation announced on November 17th the item list involved in the latest export rebate hike, including rubber products, pesticides, daily chemical products and medical chemicals, among other chemical products. The export rebate increase is the third hike in the second half of the year.
   Higher export rebate rates and lower export tariffs are expected to help the industry regain confidence and keep stable production, plus adding more revenue to the chemical sector, according to insiders.
   The export rebate rate for some rubber products is raised to 9% from 5%, including vulcanized rubber string and rope as well as health care products, while that for some rubber- and plastic-based shoes and boots is hiked to 13%, effective December 1st, 2008.
   A manager from China Crop Protection Industry Association said the latest export rebate adjustment involves more than 20 items with over 1 000 products in the pesticide sector. This means virtually all the pesticides have been included, except for those classified as products requiring high energy consumption and producing lots of pollutions.
   The export rebate rate for aramite, phosphorus oxychloride and glyphosate is raised to 9% from 5%, and that for baygan MEB, acequinocyl, dinoterb acetate is increased to 13% from 5%.
   The large-scale tax rebate hikes reflects the government effort to encourage production in the farming sector, balance the demand for pesticides between boom and low seasons. It enables the pesticide makers to maintain normal production and help ensure supply in the upcoming peak use season for pesticides.
   In addition, the tariff line affected by the adjustment also includes chemical products such as toluene, methylene bromide, o-xylene and 4-chlorotoluene, the rebates on those are all fixed at 9%. The rebates for polymethylene phenyl isocyanate and triacontanol are adjusted to 13%.
   This means the government is losing control on the labor-intensive industries against the backdrop of the more challenging macroeconomics environment.
   Some industry participants believe the latest adjustment will benefit the chemical industry, but stress any industry's success shouldn't be built on taxation policies in the end, which says, companies should catch up in terms of innovation capability.