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].

Core Viewpoint - The article discusses the recent closure of several gold trading companies in Shenzhen's Shui Bei area, questioning why these businesses, which should be profiting from high gold prices, are facing shutdowns and financial troubles [2][4]. Group 1: Company Closures - Multiple gold trading companies, including Junhao and Yuebaoxin, have closed their offices, with reports of police involvement and a growing list of companies allegedly "running away" with funds [2][4]. - The Shenzhen Gold and Jewelry Association has attempted to clarify that the rumors of widespread company failures are exaggerated, stating that only a few companies are experiencing issues [2][4]. Group 2: Trading Model - The article highlights a long-standing trading model in Shui Bei known as "private betting," where gold traders act more like "gamblers" betting on gold price movements rather than traditional traders [3][6]. - This model involves locking in prices with clients while delaying the actual delivery of gold, creating a time gap that allows for speculative trading [8][10]. Group 3: Financial Risks - As gold prices have risen significantly, traders who bet on price declines have faced severe financial losses, leading to the collapse of some companies [12][13]. - The leverage in the trading model has increased, with fixed deposit amounts becoming riskier as gold prices rise, resulting in substantial financial strain on smaller traders [13][24]. Group 4: Industry Impact - The fallout from these closures has not only affected the companies involved but has also caused economic losses for businesses in the supply chain, with reports of significant losses for some gold shops [15][16]. - The incident has led to a loss of trust in the industry, with many traders now demanding cash transactions instead of credit, increasing operational costs for smaller businesses [24][25]. Group 5: Regulatory Environment - The article points out the lack of regulatory oversight in the Shui Bei gold trading market, where many transactions occur outside of formal channels, creating a gray market that is prone to risks [6][24]. - Despite previous warnings from authorities about the risks associated with such trading practices, the same issues have resurfaced as gold prices continue to rise [26].