Thursday, December 25, 2008

Steel Maker Says Tax Cut Will Bolster Profits

SHANXI Taigang Stainless Steel Co, China's biggest producer of the metal, jumped the most in four weeks in Shenzhen trading after it said a tax cut would bolster profits.

Corporate income tax will probably be slashed to 15 percent from 25 percent for the three years from January 1, 2008, after it was recognized as a "high-technology company," the Taiguang, Shanxi-based mill said yesterday. Taigang shares gained 1.57 percent to close at 3.88 yuan in Shenzhen. The benchmark CSI 300 Index dropped 1.66 percent.

The tax cut would bolster a company suffering from falling demand and prices, Bloomberg News said. Shanxi Taigang's profit plunged 51 percent to 414.7 million yuan (US$61 million) in the third quarter as China's production capacity rose faster than demand grew.

Customers are also relocating to lower-cost countries.

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