Fuel tax evasion probe nabs 2 traders
By Richard Fu |
March 26, 2011, Saturday
|
Print Edition
Print Edition
Two Chinese traders at Swiss trading houses Glencore International and Kolmar Group have been detained by China's customs authorities during an investigation into tax evasion on fuel imports.
Since late last year, independent refiners and importers in south China have started importing "power kerosene" - a blend of kerosene and diesel - from which diesel can be easily extracted, sources said.
Power kerosene falls into a taxation no man's land as it's neither kerosene nor diesel and so exempt from the taxes levied on imports of other fuel products.
Importers, to circumvent customs regulations, would buy power kerosene from international trading houses such as Glencore.
The two detained were Li Buhua of Glencore and Dou Shengyuan of Kolmar and both have been released on bail, the 21st Century Business Herald newspaper reported.
The two companies couldn't be reached for comment while the customs office declined comment.
Some Chinese companies are also said to be involved in the investigation.
In China, private refiners typically supplement crude oil with fuel oil as their feedstock to make refined products such as diesel because state companies control crude supplies. This is not sustainable when fuel oil prices go up, as has been happening in the final months in 2010, and in the face of the import tax.
China levies a consumption tax of 812 yuan (US$124) a ton on the imports of fuel oil. The newspaper said the investigation involved 800,000 tons of power kerosene imports and the amount of tax evaded could amount to almost 1 billion yuan.
A story published late last year by Platts, a leading global provider of energy information, said Sinopec was believed to have filed a protest to the customs, which means the loophole will likely be plugged soon.
Since late last year, independent refiners and importers in south China have started importing "power kerosene" - a blend of kerosene and diesel - from which diesel can be easily extracted, sources said.
Power kerosene falls into a taxation no man's land as it's neither kerosene nor diesel and so exempt from the taxes levied on imports of other fuel products.
Importers, to circumvent customs regulations, would buy power kerosene from international trading houses such as Glencore.
The two detained were Li Buhua of Glencore and Dou Shengyuan of Kolmar and both have been released on bail, the 21st Century Business Herald newspaper reported.
The two companies couldn't be reached for comment while the customs office declined comment.
Some Chinese companies are also said to be involved in the investigation.
In China, private refiners typically supplement crude oil with fuel oil as their feedstock to make refined products such as diesel because state companies control crude supplies. This is not sustainable when fuel oil prices go up, as has been happening in the final months in 2010, and in the face of the import tax.
China levies a consumption tax of 812 yuan (US$124) a ton on the imports of fuel oil. The newspaper said the investigation involved 800,000 tons of power kerosene imports and the amount of tax evaded could amount to almost 1 billion yuan.
A story published late last year by Platts, a leading global provider of energy information, said Sinopec was believed to have filed a protest to the customs, which means the loophole will likely be plugged soon.
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