China should eliminate VAT on scrap imports

A few weeks ago, I represented BIR at a forum that was intended to apprise shippers and importers of scrap to and inside China of new regulations that would be put into place in the near future. While some of these new regulations deal with environmental issues and are worthy, most deal with procedures to stop smuggling by misdeclaration of product class and value. You have all read many versions of the somewhat confusing new policies, but suffice it to say that they are directed at exacting proper revenue from loads of material that are being misrepresented by importers - something over which the export community has little control.

It seems that when China imposes new regulations or tries to enforce current ones to remedy various situations, the unscrupulous among the importing community find a way to get around the rules. It becomes a vicious cycle: new rules; new games; and yet more new rules. With corruption rife in so many aspects of scrap including smuggling and bribe-taking, it seems that a cancellation of VAT on scrap would resolve the issue.

China doesn''t have enough mineral raw materials, and if it did it wouldn''t need all of our scrap. VAT on scrap seems to be counter-intuitive: why make your domestic industry pay such a huge amount of money on so valuable a commodity?

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