- High Tax Warning From Alibaba
- The U.S. Trade Balance Gave A Deficit Of 75.7 Billion Dollars
- Reserve Bank Of India Keeps Interest Rates Steady
High Tax Warning From Alibaba
China’s number one e-commerce giant announced that the government’s 10 % tax exemption applied to some units will end. This means an increase in the costs of China’s largest companies.
The Beijing government’s tax step is one of the drastic measures against the most prominent tech giants, from Alibaba to Tencent Holdings.
In a column in the state-sponsored newspaper Securities Times on Thursday, it was stated that China should remove the tax exemption for the gaming industry and that these companies are now big enough.
“Because the preferential tax rates related to Key Software Enterprises (KSE) are subject to annual review by the relevant tax authorities in China, there is always a risk that companies that apply would not be granted the tax benefit,” Citigroup analyst Alicia Yap wrote in a research note Friday. “The argument basis sounds reasonable given a tightening regulatory environment and recent anti-trust investigation and fines on the internet sector.”
Bocom analyst Connie Gu estimated that the tax adjustment would result in Alibaba’s loss of 11 billion yuan, or $1.7 billion, in the fiscal year.
Alibaba announced its balance sheet on Tuesday, and its Q2 sales fell short of forecasts for the first time in two years.
The U.S. Trade Balance Gave A Deficit Of 75.7 Billion Dollars
The U.S. trade balance deficit rose to $75.7 billion in June, from $71 billion in May.
According to the data, the trade deficit, which was $71 billion in May, increased by $4.7 billion, corresponding to 6.7 % monthly.
While U.S. exports increased by 0.6 % month-on-month to $207.7 billion, imports increased by 2.1 % month-on-month to $283.4 billion.
“Today’s report came in largely as the Q2 GDP (gross domestic product) data last week suggested. With imports outpacing exports for the quarter, net exports subtracted 0.4 %age points from Q2 headline real GDP growth,” Jay Bryson and Shannon Seery, economists at Wells Fargo Securities, said Thursday in an analysis.
“The trade deficit likely will remain elevated in coming months due to continued strength in U.S. domestic demand,” they said, adding trade could be another drag on U.S. economic growth in the third quarter of the year.
However, “it remains to be seen how trade evolves from here due to the rise in the Delta variant in the United States and the severe transportation bottlenecks the sector continues to face,” they noted.
U.S. exports increased by $54.6 billion, and imports increased by $73.7 billion, resulting in an annual change in the U.S. trade deficit of $19.1 billion.
Reserve Bank Of India Keeps Interest Rates Steady
Pointing out that the ongoing financial and monetary support is critical, the Reserve Bank of India kept the policy rate at the historically low level of 4 %, as expected.
In line with expectations, the Reserve Bank of India (RBI) kept the policy rate unchanged at 4 %.
All 29 economists surveyed by Bloomberg had predicted that the Bank would keep the policy rate constant at 4 %.
In the 6-member Monetary Policy Committee, it was decided to continue the supportive stance of the Bank with a 5 to 1 vote.
The Bank raised its inflation expectation for the 2022 fiscal year from 5.1 % to 5.7 %. In his statements regarding the decision, Reserve Bank of India Chairman Shaktikanta Das pointed out that the current inflationary pressures caused concern. It emphasized that the trend in question is temporary.
Chairman Das stressed the need for continued support on the financial and monetary side to support the recovery.
The IMF and the Asian Development Bank had lowered their growth expectations to 9.5 % and 10 %, respectively, with concerns about the third wave in the epidemic last month.