China lowers stamp tax to boost market sentiments
China on Monday lowered the stamp tax from the current two per thousand for both the buyer and the seller, to one per thousand, in an effort to stimulate the depressed stock markets of the Communist giant.
Announcing the tax cut, an official with the Ministry of Finance said it has been approved by the State Council, or the Chinese central government, and is intended to help promote the growth of the securities markets.
Experts say the move will help reduce stamp tax revenues by billions of yuan per year, but the decision is good news for the country's bearish stock markets, which slumped to record lows in nearly six years during the past week.
Chinese stock markets have been bearish and investment sentiment quite weak for the past several years owing to irregularities by listed firms, securities firms and structural problems of the stock market system, Xinhua news agency reported.
China imposed a six per thousand stamp tax on stock transactions when its stock markets were created since 1990. The tax rate was later readjusted a couple of times.
China has collected more than $12 billion in stamp tax on stock transactions since then.