Core Viewpoint - The new tax policy for gold trading, effective from November 1, 2025, aims to enhance the attractiveness of on-exchange trading, promote the standardization and centralization of gold transactions, and improve market transparency and regulatory efficiency [1][5]. Summary by Sections Tax Policy Adjustments - The announcement specifies that members or clients trading standard gold through the Shanghai Gold Exchange and Shanghai Futures Exchange will be exempt from value-added tax (VAT) when selling standard gold [3]. - For physical delivery, transactions will be categorized into "no physical delivery" and "physical delivery," with different tax treatments applied [3][4]. - Investment-use gold purchases will benefit from VAT refunds and exemptions from urban maintenance and education fees, while non-investment-use purchases will be exempt from VAT but will require different invoicing [3][4]. Market Impact - The new policy is expected to strengthen the appeal of on-exchange trading, guide the rational allocation of gold resources, and potentially shift some off-exchange trading to on-exchange, enhancing market transparency [5][6]. - Gold prices have seen significant increases, with spot gold prices reaching $4,002.69 per ounce, up over 52% year-to-date, indicating a favorable environment for the new tax policy [5]. Stakeholder Effects - The policy will impact four main groups: exchange members, institutional investors, ordinary consumers, and downstream businesses in the gold processing and retail sectors [6]. - Institutional investors may shift towards on-exchange trading to benefit from lower tax burdens, while ordinary consumers may become more discerning about purchasing channels to maximize tax advantages [6][7]. Challenges for Small Gold Merchants - Small gold merchants face structural challenges due to the new policy, including cost pressures and compliance requirements, which may lead some to exit the investment gold market [9]. - The traditional profit models of small merchants will undergo significant changes, necessitating a shift towards enhancing product value and brand differentiation to sustain profitability [9].