Chinese ferrous scrap recyclers set for 30% VAT rebate on July 1.2015
SAN MATEO, Calif., June 29, 2015 -- Armco Metals Holdings, Inc. ("Armco Metals Holdings" or "the Company") (NYSE MKT:AMCO), a distributor of imported metal ores and a steel recycler in China, today announced that its Armco (Lianyungang) Renewable Metals, Inc. subsidiary ("Armco Renewable Metals") will benefit substantially from the new incentive policy that renewable resources industry is set for value-added tax ("VAT") rebate effective on July 1, 2015, ranging from 30% to 100% depending upon the commodity, among which rebate for ferrous scrap is 30%, according to a statement from Ministry of Finance of P.R.C on Thursday, June 25, 2015.
The VAT rebate policy was once implemented in year 2009 and 2010 but ceased in year 2011 due to consideration for industry rectification and environmental protection. The policy effective on July 1, 2015 mainly applies to qualified processing recyclers rather than upstream scattered collectors and downstream steel mill. Armco Renewable Metals received approval for operation according to the "Standards of Entering the Scrap Steel Processing Industry" in the middle of 2014 and has been certified as a Demonstration Base for Steel Scrap Processing and Distribution by the China Steel Scrap Industrial Associations in early 2013, and thus is qualified for the favorable policy.
Armco Metals Holdings will benefit directly and substantially from the new VAT rebate policy. Effective on July 1, 2015, the Company's main products ferrous scrap and waste plastics will have a 30% and 50% of VAT rebate, respectively. The Company's revenue from selling ferrous scrap and waste plastics in the first quarter of 2015 amounted $15 million.
"It is a long-expected policy for the Company and our shareholders, tax rebate means a cut in costs , an expected approximately 5% or so raise in gross profit per metric ton for the related products for us, an encourage to steel scrap utilization for steel mill and support for qualified players in the industry." Commenting on the announcement, Kexuan Yao, Chairman and CEO of Armco Metals Holdings, stated, "In addition, China is likely to expand a pilot reform to replace business tax with value-added tax (VAT) to the construction and real estate sectors in year 2015 according to the media reports. Given that more effective control on management and authentication for VAT than business tax, we believe we will gain more competitive power in a more regulated and fair competition market environment."