Chinese Tax Structure Drives Silver Premium

The silver market is facing an unusual situation where prices are higher in Shanghai than in London and New York, but this does not reflect genuine demand. Instead, a tax structure in China is responsible for the premium.

According to Metals Focus and the Silver Institute, the Chinese tax system levies 13% import value-added tax on silver bullion, but allows refineries that re-export refined metal to pay no tax on the silver content. This creates an incentive for refineries to export refined metal rather than importing it.

The result is a situation where China exports a record amount of silver, while imports are minimal. In 2025, China exported 162 million ounces of silver, compared to almost none in imports. The Shanghai premium has been misinterpreted as a demand signal, but it is actually driven by the tax structure.

The premium has been around $8 more in Shanghai than in London or New York, but this does not mean that there is genuine scarcity or high demand in China. Instead, the tax structure is driving the price difference.