Reports coming out of China indicate that the new regulations regarding imports of raw and wet-blue hides and skins into China have moved into the next stage. This is unlikely to provide Chinese tanners with any good news unless they are producing entirely for the domestic market, whereby they have been paying the taxes all along.

The major change to the regulations appears to be that the rates of duty drawback have been reduced. This means that the finished leather credit which could be claimed against re-exports has been reduced from 13% to 8%. VAT remains at 17% for raw, wet-blue and wet-blue splits and crust. The import tax against raw hides is still 5% while that for wet-blue hides and splits has been reduced from 7% to 6%. There will be no duty drawback for wet-blue splits. For crust, import duty is reduced from 9% to 5%. For tanners who also manufacture finished products the duty drawback becomes 11% of the finished product value.

In future handbooks will only apply to those companies who export either finished leather or finished products and who are already in possession of a handbook. And for renewal of handbooks, companies must meet pollution control standards, must sell their leather on to finished goods manufacturers within twelve months and will only be allowed the volume of hides specified in their 2005 handbooks. The bad news for tanners with handbooks is that they will no longer be able to defer payment of import taxes and VAT.