Wednesday, June 06, 2007

1Q China's export to British Virgin Islands - Information Released by China General Administration of Customs

By the data provided by Chinese governmental agency for the first quarter 2007, China's export to BVI in January reached 6,717,000 USD, and in January-March its level was 14,715,000 USD, that is down 48.9 % year on year. The following table released by the General Administration of Customs shows China's export to BVI in the period from 2004 to March 2007:

(Unit: 1,000 U.S. dollars)

Current monthCumulative total% Change y-o-y (Cumulative total)
2004 820-98.9
2005 22,1822605.1
2006
January7,4217,4217247.1
February537,4744721.7
March21,32128,79512746.4
April22329,01810266.1
May9,56738,58511573.0
June34738,93311181.8
July13,84152,77413001.2
August85753,63111710.9
September11,70265,33214288.0
October10,32375,65613267.3
November1,28576,9411138.0
December44,063121,004445.5
2007
January228228-96.9
February7,7707,9997.0
March6,71714,715-48.9


At first glance it seems that China-BVI export indice is showing decline, however it is too early to make any serious conclusions. Although the 1st quarter indice is 48.9% below previous year cummulative export amount, it should be noted that there are very high fluctuations month over month and as we can see from historical data, counting only for February China’s export to BVI this year is 147 !!! times higher than in February 2006. On the other hand, the amount in March previous year was the 2nd highest in the whole year 2006.

There are many factors influencing China-BVI exports level and we should clearly recognise that this is also closely related to Foreign Direct Investments from the British Virgin Islands companies to Chinese economy.

Recent activities toward unification of China's corporate tax rate for both foreign and domestic companies (instead of around 33 percent for local companies and 15 percent for foreign companies) as well as warnings about taxation of world-wide income of companies incorporated in tax havens but having no double taxation agreement with China are just the latest factors we can observe. Currently the Republic of China has more than 80 bilateral treaties on double taxation, but British Virgin Islands are not among these countries, so there is potential threat that the amount of economic co-operation between China and British Virgin Islands can decrease in the future.

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