Core Insights - The newly implemented gold tax policy is increasing tax costs for downstream enterprises in the gold jewelry industry, leading to a temporary squeeze on profit margins [2][3][4] - The industry is expected to see a shift towards more centralized trading in exchanges, promoting transparency and standardization [3][10] Tax Policy Impact - The new tax policy, effective from November 1, 2025, classifies gold transactions into "investment" and "non-investment" categories, with increased tax burdens for non-investment uses [3][4] - Non-investment gold enterprises will see a reduction in input tax deductions from 13% to 6%, effectively increasing their gold procurement costs by approximately 7% [4][6] Market Reactions - Following the announcement of the new tax policy, many businesses in the Shenzhen Shui Bei market are adopting a wait-and-see approach, leading to a noticeable decline in trading activity [2][6] - Retail prices for gold jewelry have increased, with reports of price hikes of 60 to 70 yuan per gram, as businesses pass on the cost pressures to consumers [8][9] Industry Restructuring - The new tax regulations are expected to reshape the competitive landscape of the gold industry, potentially leading to a consolidation of smaller players as they struggle to compete with larger brands [9][10] - Analysts predict that the tax changes will drive a shift from gray market transactions to more regulated exchange-based trading, enhancing market transparency [5][10] Long-term Outlook - The tax policy is anticipated to favor exchange members and larger enterprises, as they can better absorb the tax implications and maintain competitive pricing [9][12] - The overall market is expected to see a reduction in gray market activities, with a long-term benefit for established players in the gold trading sector [9][10]

Core Viewpoint - The recent gold tax policy in China is causing a significant slowdown in the gold market, leading to a "half-stagnation" state as businesses adjust to the new regulations [2][3][7]. Tax Policy Impact - The new tax policy, effective from November 1, 2025, introduces differentiated tax management based on the purpose and nature of the buyer, increasing tax burdens for non-investment gold transactions [2][4]. - The tax burden for non-investment gold enterprises has increased, with input tax deductions dropping from 13% to 6%, raising gold procurement costs by approximately 60,000 to 70,000 yuan per kilogram [4][6]. Market Reactions - Many businesses in the gold industry are adopting a wait-and-see approach, anticipating clearer operational guidelines before making significant changes [3][7]. - Prices for gold bars and jewelry have risen across the board, with retail prices increasing by 60 to 70 yuan per gram following the announcement of the new tax policy [8][9]. Industry Restructuring - The new regulations are expected to reshape the competitive landscape of the gold industry, leading to a potential industry shakeout as smaller businesses struggle to adapt to increased costs [7][9]. - The tax reform aims to prevent fraudulent activities such as false invoicing and is likely to push the industry towards greater transparency and standardization [5][8]. Shift to Standardized Trading - The new tax policy is anticipated to drive gold trading towards formal exchanges, enhancing market transparency and reducing illegal trading activities [10][11]. - The policy maintains tax exemptions for on-exchange transactions, making them more attractive compared to off-exchange transactions, which will incur a 13% tax [10][12]. Long-term Outlook - While the immediate impact may increase costs for gold jewelry enterprises, the long-term effects could favor larger, compliant businesses with trading privileges, leading to a more concentrated market [9][12]. - The demand for investment-grade gold products is expected to rise as investors shift towards regulated channels, such as gold ETFs and standardized gold bars [10][12].

Core Viewpoint - The new tax policy on gold transactions, effective from November 1, 2025, aims to categorize gold usage into "investment" and "non-investment" types, providing a structured tax framework for gold trading in China [1][2]. Group 1: Tax Policy Highlights - The new regulation distinguishes between "investment" and "non-investment" uses of gold, with investment uses including the sale and production of high-purity gold bars and coins, while non-investment uses cover jewelry and industrial applications [2][3]. - Investment gold transactions will benefit from a VAT refund policy, while sales of these gold bars will incur full VAT without the ability to issue special invoices for buyers, potentially limiting secondary market transactions [3][4]. - Non-investment gold purchases will have a reduced VAT deduction rate of 6%, compared to the standard 13%, increasing the tax burden on purchasing enterprises [3][4]. Group 2: Market Impact and Trading Dynamics - The new tax policy encourages gold trading to shift towards regulated exchanges, where transactions will be exempt from VAT, contrasting with the higher tax rates applicable to off-exchange transactions [4][5]. - For example, a standard gold transaction worth 1 million yuan would incur a VAT of 130,000 yuan in off-exchange sales for general taxpayers, while exchange transactions would be exempt from VAT, highlighting the tax advantages of exchange trading [5]. - The policy aims to enhance market transparency and reduce risks associated with off-exchange trading, ultimately improving the regulatory framework and international standing of China's gold market [5]. Group 3: Consumer Concerns - Personal sales of used gold jewelry will remain exempt from VAT, alleviating concerns for individual sellers, although frequent and large-scale sales may be classified as business activities subject to taxation [5][6]. - Retail gold prices may experience short-term fluctuations due to the new tax policy, as upstream suppliers may pass on increased costs from reduced VAT deductions to consumers [6].

Core Viewpoint - The recent tax policy changes regarding gold transactions in China aim to categorize gold usage into "investment" and "non-investment" purposes, which will significantly impact the taxation and trading dynamics in the gold market [2][4]. Tax Policy Highlights - The new tax policy distinguishes between "investment" and "non-investment" uses of gold, which is a significant breakthrough in tax classification [2]. - Investment purposes include direct sales and the production of gold bars, ingots, and coins with a purity of 99.5% or higher, while non-investment purposes cover gold jewelry processing and industrial uses [4]. Tax Implications - For investment purposes, buyers of standard gold will benefit from an immediate VAT refund policy and exemption from urban maintenance and education fees, allowing for full input tax deduction [5]. - Non-investment purposes will see VAT exemptions, but input tax deductions will be limited to a 6% rate, which is lower than the typical 13% for general taxpayers [5][11]. Market Dynamics - The new regulations are designed to encourage gold trading on official exchanges by providing significant tax advantages for transactions conducted through these platforms [8][9]. - Transactions outside the exchanges will incur higher VAT rates, creating a clear incentive for market participants to shift towards exchange-based trading [8][9]. Consumer Impact - Individual sales of used gold items, such as jewelry, will remain exempt from VAT, but frequent and large-scale sales may be classified as business activities, subjecting them to a 3% VAT rate [11]. - Retail prices for gold jewelry may experience short-term fluctuations due to the new tax policy, as upstream costs may be passed down to consumers [15].