Plans to launch platinum trading in China are gaining momentum following an announcement by the Chinese authorities that platinum traded on the Shanghai Gold Exchange (SGE) will be exempted from value added tax (VAT).

From the beginning of this month all imported platinum, as well as that traded on the exchange, will be exempt from the 17 per cent VAT.

The Chinese Ministry of Finance and State Administration of Taxation made the announcement in a statement posted on the SGE Web site today (May 16th).

The VAT paid on imported platinum that is traded on the SGE via a state-owned company will be refunded, the statement said.

But the platinum imported by the state-owned company that isn't traded on the exchange will still be subjected to the VAT.

According to the statement Chinese manufacturers making platinum products domestically for local consumption can also apply for VAT refunds.

'We are trying our best to launch trade by the third calendar quarter,' an official told the Dow Jones newswire.

The news follows reports earlier this week that platinum trading on the SGE would be completed as soon as the authorities had granted permission, adding to expectations that the system will soon be in place.