The new regulations are aimed at ensuring compliance with the tax legislation

Five key Chinese government departments jointly issued new regulations last week aimed at strengthening export management and tax compliance. This step is aimed at combating the supply of steel abroad at low prices. 

In particular, the customs declaration now requires a tax registration check, which almost eliminates tax evasion. The new regulations strengthen supervision over the closure of companies, as firms have been using quick registration and closure as a loophole. Fraudulent export activities are subject to severe penalties, including potential criminal liability.

Exporting steel at low prices is a problem that affects China’s global trade relations. Following the abolition of tax rebates on steel exports in 2021, many exporters have resorted to so-called “proxy exports”. This has led to lower export prices, loss of tax revenues, and growing concerns from other countries about dumping by Chinese suppliers.

The new policy should ensure stricter compliance and transparency, prevent price wars, optimize the export structure and strengthen China’s reputation in the high quality steel markets.

In early March, China announced the restructuring of its steel industry by cutting production in the sector. The authorities did not provide specifics on the possible scope of cuts in the sector, while the market suggested that steel production could be reduced by 50 million tons per year.