Value-based sales tax to go nationwide
Source: Bloomberg News |
October 11, 2011, Tuesday
|
Print Edition
Print Edition
CHINA will extend a value-based tax on oil and natural gas sales nationwide starting next month to help conserve energy use in the world's fastest-growing major economy and boost local government revenues.
The tax will be 5 to 10 percent of sales, the government said on its website yesterday. China will apply a value-based tax on other commodities when the time is right, the government said in a separate statement.
China, which currently levies the tax based on volume, introduced a 5 percent tax on oil and gas sales in the Xinjiang Uygur Autonomous Region on a trial basis in June last year. The new tax regulation may crimp the earnings of companies including PetroChina Co and China Petroleum and Chemical Corp, said Qiu Xiaofeng, an analyst at Beijing-based Galaxy Securities Co.
"China will likely apply a 5 percent tax rate nationwide in the short term as they did in the western regions," Qiu said. "A 10 percent rate would be too heavy."
China is planning 23 projects in the west at a cost of 682.2 billion yuan (US$107 billion), the National Development and Reform Commission said last year. They include construction of roads and railways, wind farms and a nuclear power plant.
On a volume basis, China said it will levy a tax of 8 to 20 yuan on every ton of coking coal sold and 0.3 to 5 yuan a ton for other coal grades starting in November.
"Tax levies on coal mining are still volume-based and Chinese listed coal miners currently pay taxes within today's range," Helen Lau, a Hong Kong-based analyst at UOB Kay Hian Ltd, said by telephone. "We don't expect the government to change the tax to a value-based one in the short term as they did to oil and gas."
The tax will be 5 to 10 percent of sales, the government said on its website yesterday. China will apply a value-based tax on other commodities when the time is right, the government said in a separate statement.
China, which currently levies the tax based on volume, introduced a 5 percent tax on oil and gas sales in the Xinjiang Uygur Autonomous Region on a trial basis in June last year. The new tax regulation may crimp the earnings of companies including PetroChina Co and China Petroleum and Chemical Corp, said Qiu Xiaofeng, an analyst at Beijing-based Galaxy Securities Co.
"China will likely apply a 5 percent tax rate nationwide in the short term as they did in the western regions," Qiu said. "A 10 percent rate would be too heavy."
China is planning 23 projects in the west at a cost of 682.2 billion yuan (US$107 billion), the National Development and Reform Commission said last year. They include construction of roads and railways, wind farms and a nuclear power plant.
On a volume basis, China said it will levy a tax of 8 to 20 yuan on every ton of coking coal sold and 0.3 to 5 yuan a ton for other coal grades starting in November.
"Tax levies on coal mining are still volume-based and Chinese listed coal miners currently pay taxes within today's range," Helen Lau, a Hong Kong-based analyst at UOB Kay Hian Ltd, said by telephone. "We don't expect the government to change the tax to a value-based one in the short term as they did to oil and gas."
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