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. Last Updated: 07/27/2016

Aluminum Firms Face Tax Hikes

A government panel is scheduled to discuss Tuesday whether to scrap 5 percent tariffs on exports of aluminum and imports of intermediate product alumina, a panel source said on Monday.

But, the source said, some aluminum producers, which currently use the so-called tolling tax break, may be forced to start paying from Jan. 1 a 20 percent value-added tax on exported aluminum produced under the scheme.

"The scrapping of the two tariffs is on the agenda of tomorrow's meeting of the commission [for protective measures in foreign trade]," the source said.

The commission, responsible for drafting customs regulations, recommended the government abolish the two tariffs in March, and scrap the aluminum tolling tax breaks from Jan. 1.

Under the tolling regime, imports of raw materials -- bauxite ore and alumina -- and exports of produced aluminum, are free of tax.

A government resolution scrapping the tariffs has failed to appear, while the parliament has approved a new Customs Code, voting down an amendment that proposed abolishing tolling. The new code will become effective from Jan. 1.

But the commission source said that an incorrect formula used to describe the tolling operations in the Customs Code would not permit companies to use the tax break after Jan. 1.

To correct the formula, an amendment to the code has to be adopted by parliament.

A spokeswoman for the State Customs Committee said the customs intended to start collecting the VAT on exported aluminum exports from Jan. 1, but declined to comment further.