The removal of VAT exemptions on platinum imports will increase the cost of platinum in China

China’s Ministry of Finance, the General Administration of Customs, and the State Taxation Administration, has announced amendments to Value-Added Tax (VAT) policies for wind power and other industries. Housed within other industries includes the cancellation of the 13% VAT exemption on platinum and platinum products at the import stage from 1 November 2025. Cancelling platinum imports’ VAT exemption will put upward pressure on Shanghai Gold Exchange (SGE) platinum quotes. This may be partially offset by a reduction or full removal of the ~3% fee levied on SGE sales; however, Chinese platinum demand has historically been price sensitive and is likely to soften on higher costs.  

China’s tax reforms are part of a broader initiative (not specifically targeting platinum) to realign tax in sector/technologies which are mature such as onshore wind and nuclear power. There are muted discussions on realigning VAT exemptions on gold. Since 2003, Chinese platinum imports have had a VAT exemption which allowed for instant VAT refunds for platinum purchase on the SGE. In response proposed tax changes, the SGE’s platinum price premium to international prices has increased to 14%, versus an historic average premium of ~3% (Fig. 1). Ahead of the 1 Nov 2025 tax change, we expect Chinese platinum imports could surge to avoid paying the additional tax. Exporters may similarly front load shipments to China. Higher interim demand will push up the SGE premium. Beyond 1 Nov 2025, cancelling tax incentives will increase effective import costs for platinum, potentially dampening short-term demand in China’s price sensitive market.

Figure 1. SGE platinum price will likely increase from the average of 3.7% above international spot to closer to 13%

Over the past three-years, China accounted for around 31% of global platinum demand (Fig. 2). Given its scale, any downgrading of Chinese platinum demand could weigh on international prices. Investment demand has supported robust Chinese platinum demand growth since 2022 (Fig. 3), and this may help mitigate some of the cost pressures removing VAT relief. Notably, applying VAT on SGE sales will align primary markets with the tax treatment on secondary OTC sales (Fig. 4: worked example). Accordingly, parity between recycling and imports should allow Chinese recycling volumes, which accounts for 3.5% of global supply (Fig. 5), to increase. 

Beyond fundamentals, policy changes may result in the ~3% levy currently on SGE sales receding since primary sales are no longer VAT advantaged relative to secondary sales. Two-way trade could emerge if the SGE begins accepting delivery of platinum from other sellers under 13% VAT as opposed to only selling metal imports from Chinese Platinum Company (CPC). This removal may increase Chinese imports (Fig. 6) and improve liquidity which the GFEX has argued would support its upcoming platinum futures contracts listings.  Two-way SGE trade, OTC parity and the listing of futures should help liquidity and lower buyback discounts, further enhancing market efficiencies. 

Figure 2: China has accounted for an average of 31% of platinum demand from 2022 to 2024

Figure 3: China’s platinum demand has increased by 19% from 2022 to 2024 underpinned by strong physical bar and coin investment demand growth

Figure 4: Revised tax policies are expected to increase the cost of platinum sold via the SGE and align it to the OTC market.

Figure 5: Chinese recycling supply could benefit from the alignment of VAT policies which impact primary sales from SGE or secondary OTC platinum sales

Figure 6: Chinese platinum imports are down 12.5% YTD, but an opening up of SGE sales could stimulate more competition and possibility more imports

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