China likely to increase petroleum tax

The State Administration of Taxation will probably increase petroleum resource taxes in the near future, according to a report in the Beijing Modern Business newspaper on Tuesday.

China's current petroleum tax rate is eight (about one US dollar) to 30 yuan (3.6 US dollars) per ton, which was set by an interim provision on resource tax promulgated in 1993.

The new petroleum resource tax rate may be doubled and reach 60 yuan per ton (7.2 US dollars).

China's "big three" petroleum corporations, namely China National Petroleum Corporation, China Petro-Chemical Corporation and China National Offshore Oil Corp., will have to pay resource taxes of 6.3 billion yuan, 2.2 billion yuan and 1.2 billion yuan respectively this year, the newspaper estimated, causing their profits to shrink by large margins.

The tax increase will make the "big three" raise crude oil prices, adding a burden upon oil refineries, said Prof. Dong Xiucheng with the China Petroleum University, who objects to the tax increase.

The high tax policy also will discourage the "big three" to explore new oilfields, Dong said.

Source: Xinhua