At the start of 2026, Announcement Caishui〔2026〕No.10 jointly issued by the Ministry of Finance and State Taxation Administration came into force. The 3% simplified VAT calculation policy for ready-mixed concrete, which had been implemented for 17 years, was completely abolished. Starting from January 1 this year, general taxpayers producing self-manufactured ready-mixed concrete shall uniformly apply the general VAT calculation method at a 13% tax rate. This transformative tax reform addresses long-standing drawbacks of extensive operation in the concrete industry, pushing thousands of mixing plants nationwide to standardize financial management, restructure supply chains and upgrade business models. It stands as one of the most influential policy initiatives in the building materials industry this year.
Under the previous tax rules, mixing plants adopting simplified taxation were not required to deduct input VAT invoices, so there existed no mandatory restriction forcing upstream sand, gravel and cement suppliers to issue special VAT invoices. Uninvoiced transactions, off-book operations and predatory low-price dumping plagued the sand and gravel sector for years. Numerous small unlicensed sand and gravel workshops squeezed the profit margins of compliant enterprises via irregular invoicing. After the launch of the new policy, the 13% tax rate mandates enterprises to obtain complete input invoices for raw materials for tax deduction, turning invoicing for sand and gravel procurement from an optional measure into a rigid threshold. Mixing plants are thus forced to select compliant mines with mining permits and standardized tax payment records, eradicating the living space of grey supply chains. Market feedback shows that ready-mixed concrete enterprises across the country issued price adjustment notices intensively in Q1, raising concrete prices by RMB 10–50 per cubic meter to partially offset tax burdens caused by insufficient input deductions, which drastically rectified years of disorderly cut-throat competition.
Divergent tax burdens have accelerated industrial capacity reshuffling, forming an obvious bipolar development pattern. Large-scale green mixing plants with scale advantages, stable upstream supply and sound financial systems can obtain sufficient input invoices for sand, gravel, fly ash and admixtures through bulk centralized procurement, keeping the growth of actual tax burden manageable. In contrast, numerous small and medium mixing plants, affiliated stations and unlicensed temporary mixing facilities face sharply narrowed profit margins due to incomplete input deduction chains, and some micro-enterprises suffered losses and suspended production. Incomplete statistics from industry associations show that over 2,000 small mixing plants without compliant input supply channels withdrew from the market voluntarily in the first half of the year. Market concentration kept rising, with the market share of leading enterprises surging by more than 11 percentage points year-on-year, making large-scale conglomerate operation an inevitable industry trend.
Driven by policy constraints, mixing plants have carried out comprehensive upgrades to operation and management systems. On one hand, enterprises established invoice ledgers for incoming raw materials and digital inventory management systems to match invoices with physical batches of sand, gravel, cement and admixtures, preventing risks in tax audits. On the other hand, extending industrial chains has become a mainstream coping strategy. Many regional leading enterprises hold shares in or build self-owned compliant green sand and gravel mines to form an integrated closed loop of "aggregate mining – concrete production", securing input invoices and raw material costs at the source. Meanwhile, engineering pricing rules have been adjusted synchronously. Housing and urban-rural development authorities in Wuxi, Wuhan, Luzhou and other regions issued documents to revise the applicable tax rate of ready-mixed concrete benchmark prices from 3% to 13%, requiring contracting parties of ongoing projects to negotiate price fluctuation risks brought by tax rate changes. This measure effectively reduces engineering settlement disputes and stabilizes the construction market.
Industry experts pointed out that this VAT reform essentially leverages taxation tools to standardize the whole building materials supply chain. Although mixing plants face higher costs and heavier management workload in the short run, the policy will thoroughly optimize the business environment and phase out backward extensive production capacity in the long term. Moving forward, mixing plant operators shall continuously improve internal financial control systems, consolidate compliant upstream supply chains and boost green low-carbon production capacity. They should build core competitiveness under the new development track featuring tax compliance, environmental compliance and stable product quality, and fundamentally shift development focus from scale expansion to high-quality growth.
