China Ends Gold Tax Break, Raising Costs for Buyers

Beijing: China has scrapped a long-standing gold tax incentive, ending the ability of retailers to offset value-added tax (VAT) on gold purchases, a move that could raise consumer prices in one of the world’s biggest bullion markets.

Starting November 1, retailers will no longer be able to deduct VAT when selling gold bought from the Shanghai Gold Exchange, according to new rules issued by the Ministry of Finance. The policy applies to both investment-grade products such as high-purity bars, ingots, and coins, as well as non-investment uses like jewelry and industrial materials.

The decision aims to boost government revenue amid slowing economic growth and fiscal pressure from China’s property downturn. However, analysts say the change will likely increase the cost of gold for local consumers and dampen retail demand in the near term.

The adjustment comes after a global buying frenzy pushed gold prices to record highs earlier this year, breaching the $4,000-an-ounce level in October. The rally was fueled by strong demand from investors and central banks seeking safety amid economic uncertainty and lower U.S. interest rates.

Gold prices have since eased as investors locked in profits and U.S.-China trade tensions appeared to cool. A recent trade truce reduced demand for gold as a haven asset, while the end of India’s festive buying season added further pressure.

Despite the pullback, the metal remains near record levels, supported by continued central bank purchases and global inflation concerns. Many analysts expect prices could climb toward $5,000 an ounce within a year, citing persistent geopolitical risks and strong long-term demand.

The new tax measure could slow local gold consumption temporarily, but industry experts say China’s role as a major buyer in the global bullion market will remain intact.