Is the SGE benchmark price VAT-inclusive?

For silver, yes. The SGE's invoice rules (2022 revision, Article 23) set the VAT invoice price for delivered silver at the trade-day settlement price, tax included, so the Ag(T+D) price already carries China's 13% VAT. Gold is different: SGE gold trades are VAT-exempt, so the Au99.99 price has no VAT in it. Western spot carries no VAT either.

Does VAT make the headline Shanghai silver premium look bigger than it really is?

Yes. The headline premium compares the VAT-inclusive SGE silver price with Western spot, which carries no tax, so about 13 points of it is VAT. A reading around +13% means Shanghai is roughly level with Western spot once the tax is removed. To get the ex-VAT spread, use (1 + headline premium) ÷ 1.13 − 1. Subtracting 13 percentage points gets close for small premiums but drifts as the premium widens: a +30% headline reading is about +15% ex-VAT.

Why is gold exempt from VAT in China but silver isn't?

China exempted investment-grade gold traded through the SGE from VAT in 2003 to deepen the domestic gold market and support gold's role as a financial asset. Silver received no equivalent exemption; it's classified as an industrial commodity. Gold jewelry still carries VAT; only investment bars and coins traded through the SGE are exempt. The asymmetry is why the gold premium can be read as is, while the silver premium has the 13% built in.

How does the VAT affect retail Chinese silver buyers?

Retail buyers pay the full VAT-inclusive price. Because the SGE silver price already includes the 13% VAT, a Chinese investor buying physical silver from a dealer pays roughly the SGE price plus dealer margin. On a ¥7,500/kg benchmark, about ¥860 of that is tax. Gold buyers don't face this layer on investment-grade product. This is why retail Chinese silver demand is more price-sensitive than gold demand and why the gold/silver ratio behaves differently inside China.

Has the silver VAT rate changed recently?

China's standard VAT rate was reduced from 17% to 16% in 2018 and to 13% in April 2019. The 13% rate has been stable since. If you strip VAT out of older SGE silver prices, use the rate in force on each date. There have been periodic proposals for a partial silver exemption similar to gold, particularly from the solar manufacturing industry, but as of now no exemption has been enacted.

What drives the silver premium beyond VAT?

Once the 13% is taken out, what's left is shaped by Chinese physical demand on the SGE, capital controls that limit cross-border arbitrage, PBOC import licensing and quotas, the CNY/USD exchange rate, and SGE-specific market structure. In our data since January 2024, the ex-VAT spread has been at or below zero on most trading days. Headline readings well above +13% are the ones that point to real domestic tightness.

Do other Asian markets have a similar VAT structure?

India levies 3% GST on silver and gold, with import duty layered on top (gold import duty has been as high as 12.5%). Hong Kong and Singapore are both effectively zero-tax for precious metals, which is why they function as regional bullion hubs. Japan applies 10% consumption tax on silver but exempts investment gold. China's 13% silver VAT is on the higher end of regional norms.

China Silver VAT Explained

How China's 13% silver VAT works, why investment gold is exempt, and how the tax shows up in the headline Shanghai silver premium.

Written by

MetalCharts Editorial

Published April 15, 2026· Updated September 27, 2026

The Quick Version

China levies a 13% value-added tax on silver, including silver bought and delivered through the SGE. Investment-grade gold traded on the SGE has been exempt from VAT since 2003; silver has no equivalent carve-out.

Important: the SGE silver price includes VAT. The exchange's invoice rules treat the Ag(T+D) settlement price as tax-inclusive, while Western spot carries no tax. The headline Shanghai silver premium therefore has the 13% built in: a reading of about +13% means Shanghai and Western prices are roughly level once the tax is removed. The gold premium has no VAT in it and can be read as is.

Why Gold Is Exempt and Silver Isn't

In 2003, China's State Administration of Taxation issued a notice exempting investment-grade gold traded through the Shanghai Gold Exchange from VAT. The motivation was strategic: officials wanted to deepen the domestic gold market, support the SGE's rollout, and encourage Chinese households to hold gold as a financial asset. The exemption applies to gold traded on the SGE between qualified institutional members and to retail investment bars sold through banks.

Silver received no such treatment. Beijing classifies silver as an industrial commodity rather than a strategic financial asset, so silver carries the standard 13% VAT, on imports and on SGE deliveries alike. Periodic proposals for a partial silver exemption have surfaced, particularly from the solar manufacturing industry, which uses silver heavily, but none have been adopted.

How VAT Shows Up in the Headline Premium

Two numbers are worth keeping apart:

Headline Shanghai premium. The SGE silver price, VAT included, against Western spot, which carries no tax. This is the number we display on the site, and the 13% VAT is part of it.
Ex-VAT premium. The same comparison with the tax taken out of the SGE price (divide it by 1.13). This is the like-for-like spread between the two markets.

Worked example. Suppose global silver spot is $30.00/oz and the SGE price works out to $34.50/oz. The headline Shanghai premium is +15%. Take out the VAT and the SGE price is $30.53/oz ($34.50 ÷ 1.13), so the ex-VAT premium is about +1.8%. Most of the headline number is tax.

For someone bringing physical silver into China, import VAT is charged at the border, so the landed cost looks more like:

Western spot: $30.00/oz
13% import VAT: +$3.90/oz
Import license premium: +$0.50 to $1.50/oz
Logistics & insurance: +$0.20 to $0.50/oz
All-in landed cost: about $34.60 to $35.90/oz

Because the SGE price already includes VAT, it can be set directly against that landed cost. Importing pays when the SGE price clears it, which in this example means a headline premium above roughly 15% to 20%.

Reading the Headline Premium as a Demand Signal

Because the headline silver premium includes the 13% VAT, take the tax out before reading it as demand. A +13% headline reading is roughly parity. At +8%, Shanghai is trading about 4% below Western spot once VAT is removed. At +20%, there's a real ex-VAT premium of about 6%.

The formula is ex-VAT premium = (1 + headline premium) ÷ 1.13 − 1. Subtracting 13 percentage points gets close for small premiums but drifts as the premium widens: a +30% headline reading is about +15% ex-VAT, not +17%. What moves the ex-VAT spread is the usual list: domestic physical demand on the SGE, capital controls that limit cross-border arbitrage, PBOC import licensing and quotas, CNY/USD currency moves, and SGE market structure.

The Shanghai gold premium has no VAT in it, so it can be read as is. That's the main reason gold usually sits near zero while the headline silver premium sits nearer 13%. To compare the two metals, set the gold premium against the ex-VAT silver premium.

Other Costs Built Into the Landed Price

VAT is the largest single component, but it's not the only structural cost separating SGE prices from Western spot:

Import licensing. The People's Bank of China (PBOC) controls who can import silver and how much. License-holding institutions can charge a markup, typically $0.50 to $1.50/oz, that varies with quota tightness.
Logistics & insurance. Bullion freight from Western refineries to Chinese vaults runs roughly $0.20 to $0.50/oz depending on origin and shipment size.
Customs & storage. Smaller fees but cumulative, a few cents per ounce for documentation and approved-warehouse storage during clearance.

Together these add another ~$0.70 to $2.00/oz on top of VAT. The total non-VAT structural cost is small relative to the 13% tax, but it explains why importing silver into China rarely pays at a headline premium of just 13%.

Regional Comparison

Market	Silver Tax	Investment Gold Tax
China (SGE)	13% VAT (in SGE price)	Exempt (2003 rule)
India	3% GST + import duty	3% GST + import duty
Japan	10% consumption tax	Exempt (investment grade)
Hong Kong	No tax	No tax
Singapore	Exempt (investment grade)	Exempt (investment grade)

This is part of why Hong Kong and Singapore function as regional bullion hubs, and why physical silver flows from tax-free jurisdictions into China's gray market when the landed-cost gap gets wide enough to justify the smuggling risk.

Practical Takeaways

The headline Shanghai silver premium includes China's 13% VAT on the SGE side. A reading around +13% means the two markets are roughly level.
For the ex-VAT spread, divide by 1.13: (1 + headline premium) ÷ 1.13 − 1. Subtracting 13 points is only an approximation.
The gold premium has no VAT in it. Compare it with the ex-VAT silver premium rather than the headline one.
Retail Chinese silver buyers pay the VAT-inclusive price, which is why physical silver demand in China is more price-sensitive than gold demand and why the gold/silver ratio behaves differently inside China than offshore.
For the underlying calculation behind the displayed premium, see the methodology page.

Frequently Asked Questions

Is the SGE benchmark price VAT-inclusive?: For silver, yes. The SGE's invoice rules (2022 revision, Article 23) set the VAT invoice price for delivered silver at the trade-day settlement price, tax included, so the Ag(T+D) price already carries China's 13% VAT. Gold is different: SGE gold trades are VAT-exempt, so the Au99.99 price has no VAT in it. Western spot carries no VAT either.
Does VAT make the headline Shanghai silver premium look bigger than it really is?: Yes. The headline premium compares the VAT-inclusive SGE silver price with Western spot, which carries no tax, so about 13 points of it is VAT. A reading around +13% means Shanghai is roughly level with Western spot once the tax is removed. To get the ex-VAT spread, use (1 + headline premium) ÷ 1.13 − 1. Subtracting 13 percentage points gets close for small premiums but drifts as the premium widens: a +30% headline reading is about +15% ex-VAT.
Why is gold exempt from VAT in China but silver isn't?: China exempted investment-grade gold traded through the SGE from VAT in 2003 to deepen the domestic gold market and support gold's role as a financial asset. Silver received no equivalent exemption; it's classified as an industrial commodity. Gold jewelry still carries VAT; only investment bars and coins traded through the SGE are exempt. The asymmetry is why the gold premium can be read as is, while the silver premium has the 13% built in.
How does the VAT affect retail Chinese silver buyers?: Retail buyers pay the full VAT-inclusive price. Because the SGE silver price already includes the 13% VAT, a Chinese investor buying physical silver from a dealer pays roughly the SGE price plus dealer margin. On a ¥7,500/kg benchmark, about ¥860 of that is tax. Gold buyers don't face this layer on investment-grade product. This is why retail Chinese silver demand is more price-sensitive than gold demand and why the gold/silver ratio behaves differently inside China.
Has the silver VAT rate changed recently?: China's standard VAT rate was reduced from 17% to 16% in 2018 and to 13% in April 2019. The 13% rate has been stable since. If you strip VAT out of older SGE silver prices, use the rate in force on each date. There have been periodic proposals for a partial silver exemption similar to gold, particularly from the solar manufacturing industry, but as of now no exemption has been enacted.
What drives the silver premium beyond VAT?: Once the 13% is taken out, what's left is shaped by Chinese physical demand on the SGE, capital controls that limit cross-border arbitrage, PBOC import licensing and quotas, the CNY/USD exchange rate, and SGE-specific market structure. In our data since January 2024, the ex-VAT spread has been at or below zero on most trading days. Headline readings well above +13% are the ones that point to real domestic tightness.
Do other Asian markets have a similar VAT structure?: India levies 3% GST on silver and gold, with import duty layered on top (gold import duty has been as high as 12.5%). Hong Kong and Singapore are both effectively zero-tax for precious metals, which is why they function as regional bullion hubs. Japan applies 10% consumption tax on silver but exempts investment gold. China's 13% silver VAT is on the higher end of regional norms.