China Ends Gold Tax Break â What It Means for Global Prices and Bullion Markets
In a move that could reshape the global gold landscape, China has officially ended its long-standing gold tax break, raising questions about how the policy shift will affect both domestic consumers and the international bullion market.
Effective November 1, 2025, the Ministry of Finance of China announced that retailers will no longer be able to offset the value-added tax (VAT) on gold purchased from the Shanghai Gold Exchange. This includes both direct sales and processed gold products.
đ° Why This Matters
For decades, Chinaâs VAT exemption helped fuel one of the worldâs largest and most liquid retail gold markets. By removing this incentive, Beijing appears to be targeting increased tax revenue amid a slowing economy, declining property sales, and growing fiscal pressures.
The new policy is expected to raise retail gold prices for millions of Chinese buyers. Experts say the move could also cool consumer demand, particularly among small-scale investors who often purchase gold jewelry and coins as a hedge against inflation.
đ A Turning Point for Global Gold Prices
The change arrives at a sensitive time for the global bullion market. Just weeks ago, gold hit record highs, briefly touching $4,000 per ounce, before retreating as investors took profits and ETF inflows weakened.
However, analysts suggest that Chinaâs latest move could add upward pressure on international prices in the coming months. As domestic supply tightens and consumers rush to buy before prices climb further, short-term volatility is likely.
đ Broader Market Impact
Beyond China, global investors are closely watching how this decision influences safe-haven demand and central bank buying. Several Asian economies, including India, rely heavily on Chinaâs retail gold trends to forecast regional price momentum.
The policy shift may also prompt increased imports from Hong Kong and Singapore as traders seek alternative supply chains with lower tax burdens.
đȘ Long-Term Outlook: Still Bullish
Despite the short-term uncertainty, experts remain bullish on goldâs long-term prospects. With U.S. interest rates expected to decline, ongoing geopolitical tensions, and robust central bank purchases, some analysts predict that gold could approach $5,000 per ounce within a year.
In essence, while Chinaâs tax overhaul might raise short-term volatility, it also reinforces goldâs enduring status as a global store of value â one that remains deeply intertwined with macroeconomic stability and investor sentiment.