Tax Increase
Geopolitics and national policies have also brought uncertainty to China’s wine industry.
On August 29, the Chinese Ministry of Commerce preliminarily determined that there was dumping of brandy from the European Union (EU). In October, the Ministry announced anti-dumping deposits ranging from 30.6% to 39.0% on EU brandy.
Prior to the actions, on May 18, Yuyuan Tantian (玉渊谭天), a social media account under China’s state-owned CCTV, posted on Weibo, quoting a lawyer familiar with economic and trade matters. The lawyer stated, “Europe also provides substantial subsidies in the agricultural sector, and the EU is heavily reliant on the Chinese market, including for products such as wine and dairy.”
Yuyuan Tantian also warned that China would take retaliations, citing an anonymous insider source.
The Chinese Chamber of Commerce to the EU described this warning as “significant” and added that “European wine and dairy products may find themselves caught in the crossfire.”
Moreover, the looming threat of shifting consumption taxes downstream is approaching. On July 18, 2024, a decision passed during the Third Plenary Session of the Twentieth Central Committee explicitly stated the intention to move the consumption tax collection point and gradually devolve it to local governments.
Currently, China’s wine tax is 10% and is collected during clearance. If this tax were to shift to the consumption end while maintaining the same rate, the tax base would change from the landed price to the retail price, leading to an increased tax base and, indirectly, higher prices.
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