China’s Stone Export VAT Rebate Cancellation Could Drive FOB Price Hikes, Spur Q1 Procurement

For procurement teams, the difference between a competitive quote and an overpriced contract hinges on China’s 13% export VAT rebate—a fiscal mechanism where data shows every 1% rate change triggers a 13% shift in export volume. For stone products like granite slabs, certain construction materials retain partial rebate eligibility, but stone commodities (including marble, limestone, and granite products) have lost full rebate access, forcing manufacturers to raise international prices to cover unrefunded production taxes.

This analysis deconstructs the ECR (Exempt, Credit, Refund) protocols used by certified General Taxpayers like Top Source Stone to previously neutralize production taxes and subsidize international pricing. We evaluate the landed cost implications of FOB vs. EXW IncoTerms and provide a technical framework to reverse-engineer supplier markups using the Markup = Margin / (1 – Margin) formula to capture hidden 1-2% optimization opportunities.

Understanding China’s 9%-13% Export VAT Rebate for Stone (Now Cancelled)

China previously refunded the 9%-13% production tax on exported stone products, allowing manufacturers to offer lower international prices compared to domestic rates.

This fiscal mechanism previously covered roughly 80% of eligible stone export items, specifically including high-volume goods like granite slabs, marble tiles, and limestone carvings. By refunding the tax paid during raw material procurement (e.g., quarried stone) and processing, the government allowed factories to lower their cost of goods sold for the international market.

The Fiscal Mechanism: How the 13% Rebate (Now Cancelled) Fueled Stone Export Competitiveness

The government previously calculated the rebate based on the FOB (Free On Board) value of the shipment, effectively removing the domestic tax burden from the final export price. The November 2024 policy update fully eliminated rebates for stone products (among 249 categories), alongside sectors like photovoltaics and batteries, marking a shift to rebalance industrial structure while impacting global stone pricing dynamics.

Procedural Compliance: Past Eligibility Requirements (Relevant for Historical Cost Benchmarking)

Securing the rebate previously required strict adherence to Chinese tax authority timelines. Factories that missed filing windows or failed to provide specific trade documentation lost the ability to claim the refund, which often forced them to raise export prices to cover the gap— a scenario now permanent for stone exporters.

• Former Application Deadline: Manufacturers had to submit formal claims by April 1st of the year following the export.

• Former Processing Window: Standard approval typically took 2 to 3 months from the time of submission.

• Former Required Documentation: Eligibility required “General Trade” classification, valid VAT invoices, and proof of foreign exchange receipt.

For international buyers, the loss of this rebate is the primary reason Chinese stone quotes are now rising sharply above historical levels. It was not a subsidy but a tax neutralization that previously kept the stone supply chain competitive—its removal directly elevates production costs for exporters.

How Stone Factories Previously Used Rebates to Subsidize Export Pricing

Many factories once integrated VAT rebates directly into export quotes, lowering international prices below domestic rates to gain market share while maintaining margins through government offsets. Now, without this buffer, prices must rise to sustain profitability.

The VAT/CT Offset Mechanism: Lost Rebates = Higher Stone Export Prices

China launched the ECR system in 1985 to make its goods cheaper abroad. By refunding Value-Added Tax (VAT) and Consumption Tax (CT) on exported items, the government previously covered a portion of the production cost for stone factories. Manufacturers calculated these expected refunds before sending quotes to international buyers.

The math was simple: a factory lowered its export price to grab market share, knowing the tax refund bridged the financial gap. Export profits often stayed higher than domestic sales because the price cut offered to the buyer was smaller than the total rebate the factory collected from the state. With the rebate cancelled, this dynamic reverses—stone exporters must either absorb the 13% tax cost or pass it to buyers, with most choosing the latter given thin industry margins.

Impact of 2025 Policy Shifts: Quantifying Rebate Loss on Stone Prices

Numbers prove the link between rebates and pricing power. Research shows that every 1% increase in the rebate rate triggers a 13% jump in export volume—conversely, every 1% decrease (or cancellation) leads to a corresponding price increase and volume contraction. The 2025 policy reversal has directly raised the price floor for Chinese stone exports and squeezed margins for manufacturers unable to pass costs to buyers.

• Full Terminations: The government eliminated rebates for all stone products, covering 47 tariff items including granite, marble, limestone, and artificial stone.

• Cost Escalation: Terminating the rebate on granite slabs immediately increased market prices.

• Volume Impact: It might be a 15-18% drop in stone export inquiries in the first month post-policy, as buyers adjust to higher price points.

For procurement teams, these policy shifts are a direct signal of rising landed costs. When a rebate disappears, the factory has no choice but to raise quotes—especially in stone markets, leaving little room for cost absorption.

Why Was the Export Price of Stone Previously Lower Than the Domestic Price?

China’s 9%-13% VAT rebate and zero-rated export status once eliminated the domestic tax burden, allowing factories to quote lower prices for international buyers while keeping profit margins. This advantage has now vanished with the rebate cancellation.

Zero-Rated Exports vs. Domestic Output VAT Liabilities (Now Uniform for Stone)

Domestic sales in China carry a 13% output VAT. Stone manufacturers must add this tax to the base price of every product sold to local retailers. Exported goods previously operated under a “zero-rated” policy, removing the 13% tax obligation immediately. Now, with the rebate cancelled, exported stone is subject to the same tax burden as domestic sales, erasing the historical price gap.

International buyers previously received quotes that stripped away internal fiscal loads—this disparity allowed factories to offer high-quality granite and marble products at prices unsustainable in the Chinese retail market. Today, that tax burden is baked into export quotes, aligning international and domestic pricing.

The Lost Role of the 13% Rebate and ECR Protocols for Stone

Exporters once used the Exempt, Credit, Refund (ECR) method to recover the 13% input VAT paid on raw materials like quarried stone, processing chemicals, and energy. Unlike some household goods that retained rebates, stone products were fully excluded from the 2026 policy adjustments, ending this tax recovery mechanism.

Factories previously passed 9-11% of this tax recovery directly into the FOB price to secure large-scale contracts, operating on slim 2-3% margins derived from the remaining rebate balance. Now, without this subsidy, those margins vanish unless prices rise proportionally.

How to Audit Your Stone Supplier’s Quote to Find Hidden Buffer Margins

Deconstruct lump-sum pricing into raw materials (quarried stone), processing labor, and overhead. Reverse-engineer margins using the Markup = Margin / (1 – Margin) formula to expose inflated buffers and optimize costs by 1-2%.

Impact on IncoTerms: A Comparative FOB vs. EXW Cost Analysis for Stone

FOB saves 12-18% on landed costs for China stone imports by shifting $500-$800 in origin fees (quarry-to-port transport, stone inspection, and 2025 compliance risks) to the seller.

Financial Implications of Origin Logistics and Risk Transfer

Stone’s bulk and weight make origin logistics costly—choosing FOB leverages the seller’s local carrier relationships and quarry-to-port networks, which are often 20-30% cheaper than buyer-organized logistics.

• Direct Savings: FOB lowers total landed costs by 12-18% via the seller’s negotiated logistics contracts.

• Origin Charges: EXW buyers must pay $350-$600 for inland trucking (quarry to port) and $150-$200 for stone-specific export handling (crating, customs inspection).

• Risk Threshold: FOB risk transfers only once goods are loaded onboard; EXW transfers risk at the factory, requiring immediate insurance coverage for fragile stone products.

New stone buyers should prioritize FOB to avoid hidden origin charges. Veteran importers may attempt EXW for 1-2% savings, but this only works with a dominant China-based logistics network—rare post-rebate, as factories focus on core production over logistics concessions.

2025 Compliance Benchmarks and HS Code Delay Risks for Stone

The 2025 trade environment introduces technical friction for stone exports, including updated HS codes for natural stone products (Chapter 68 and 69 of the Harmonized System) and stricter sustainability audits for quarries.

• Inspection Delays: 2025 HS code revisions increase EXW logistics costs by 10-14% due to customs bottlenecks for stone classification.

• Regional Compliance: EU Carbon Border Adjustment Mechanism (CBAM) and US Lacey Act requirements favor FOB, as sellers manage local quarry sustainability documentation.

• Regulatory Complexity: New GCC stone import standards increase export declaration difficulty—FOB sellers are better equipped to handle region-specific paperwork.

FOB remains the industry standard for high-volume stone shipments, mitigating storage fees and inspection delays during the 2025 transition period.

Final Thoughts

In previous, export prices drop because the Chinese government refunds input VAT (9-13%) to the exporter. Domestic sales trigger the full 13% output VAT without these rebates. This tax-free export status allows factories to provide more competitive pricing to international buyers.

Now the loss of China’s 9%-13% stone export VAT rebate has permanently altered global pricing dynamics—there is no longer a legal mechanism to secure stone prices below Chinese domestic rates.