HAITONG INT'L: New gold tax policy increases overall tax burden, brand price increases transmitted to end consumers.

Haitong International released a research report stating that on November 1, 2025, the Ministry of Finance and the State Administration of Taxation jointly issued the "Announcement on the Tax Policies Related to Gold" (Cai Shui [2025] No. 11), which will be implemented from November 1, 2025, until December 31, 2027. On November 3, major gold and jewelry brands generally raised prices by about 5% - 6% to partially pass on the additional tax burden. Subsequently, as international gold prices fell, brands began to reduce prices. The bank predicts that under the dual impact of policy and market, the prices of domestic gold and jewelry will show a dynamic adjustment trend, and recommends continuing to track the landing effects of subsequent policies and industry changes. The report states that after the new policy is implemented, there is a significant differentiation in the tax treatment between the investment and non-investment uses of gold, and the overall cost increase trend in the industry chain is clear. In terms of the purchase of gold for investment purposes, the previous policy allowed gold exchange members (such as CHOW TAI FOOK, Lao Feng Xiang, etc.) to issue special value-added tax invoices to downstream customers for full input tax deduction; the new policy can only issue ordinary invoices, and no special invoice can be issued, meaning that the input tax deduction is zero. For non-investment uses (such as jewelry materials), the previous policy also allowed the issuance of special invoices and full deduction; the new policy changed to only issue ordinary invoices, and the purchasing party calculates the input tax amount based on a fixed deduction rate of 6% of the ordinary invoice amount, resulting in a significant decrease in the deduction ratio. Overall, the tax burden on physical gold in the raw material trading stage has significantly increased and has been transmitted along the industry chain to the overall cost. The bank believes that against the background of limited profit margins at all levels and companies struggling to fully absorb rising costs, brand's staged price increases can help offset policy impacts, stabilize profits, but it also raises the price of consumer purchases of gold jewelry, potentially limiting end demand; at the same time, under the new policy, the tax burden for gold and jewelry enterprises selling investment gold to franchisees can only issue ordinary invoices, leading to a significant increase in the tax burden in the intermediate circulation link, placing greater pressure on companies with a higher proportion of franchisees. According to the bank's calculations, assuming a gold and jewelry company (exchange member) purchases gold with an actual transaction amount of 1 million yuan, sells for 1.5 million yuan excluding tax, and the original tax rate is 13%, the amount of tax payable for a single transaction in non-investment uses has increased from 80,000 yuan under the old policy to 135,000 yuan under the new policy, and if for investment purposes it has increased to 195,000 yuan, with a greater increase in tax burden for investment gold. The specific reason is that in the non-investment use scenario, the gold and jewelry company can still issue special invoices to downstream customers, with the output tax rate remaining at 13%, but the deductible input tax rate has decreased from 13% to 6%, resulting in an increase in the effective tax burden for the company; in the investment use scenario, the input deduction rate has decreased from 13% to 0%, resulting in a more significant increase in tax burden. At the same time, downstream enterprises of the company can only receive ordinary invoices for investment purposes, unable to obtain input tax deduction with special invoices, leading to a simultaneous increase in effective tax burden, squeezing profit margins and passing on to end prices.