China Ends VAT Relief on Gold Sales, Increasing Costs for Retailers and Buyers

China’s Ministry of Finance has officially ended long-standing VAT exemptions on gold sales starting November 1, 2025. This major shift is expected to increase operating costs for gold retailers and push up prices for consumers across the country.

China’s Policy Shift on Gold VAT: What It Means?

Effective November 1, 2025, gold retailers in China will no longer be able to offset VAT on gold purchased from the Shanghai Gold Exchange. This change applies to all forms of gold, including jewellery, coins, high-purity bars, and industrial materials. 

The previous VAT mechanism helped retailers maintain competitive pricing while managing slim margins. The policy reversal is now prompting retailers to reassess their pricing strategies and cost structures.

Immediate Consumer Impact and Retail Reactions

With this policy in effect, gold buyers may experience price increases, particularly for jewellery and investment-grade bullion. Retailers, especially those already operating on low margins, face the challenge of either absorbing the added tax burden or transferring it to consumers. 

This added cost could soften short-term demand from price-sensitive customers but is unlikely to disrupt long-term cultural or investment-driven interest in gold.

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Cross-Border Trade and Global Market Implications

As per the news reports, China, being the world’s largest gold consumer, may influence global pricing trends through this regulatory update. Consumers in neighbouring markets like Hong Kong, Singapore, and India could see shifts in gold trade volumes due to potential price disparities. Regional traders often capitalise on differentials, and fluctuations in Chinese pricing structures may redirect some demand toward more cost-efficient markets.

Conclusion

China’s removal of VAT benefits on gold sales from November 1, 2025, marks a significant policy change impacting retailers and consumers alike. As buyers face increased prices and retailers adjust to higher tax obligations, the ripple effects may stretch beyond national borders, affecting trade flows and market sentiment in the broader bullion industry.

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