The tax, which was trialled in some of the country’s poorest regions, will be extended to re-balance tax revenues between central and local governments.
The finance ministry announced in January that the tax will be rolled out within five years, but this has been brought forward.
That announcement confirmed that the benchmark rate will continue at 5% but may vary depending on the particular resource. The tax will be levied on the value rather than the quantity of the resource.
According to the State Council, a range of tax rates is permitted, rather than a specific rate. For crude oil and natural gas sales, that range is fixed at between 5% and 10%, but it is considered that, in the present high price market, the lower 5% rate will be maintained for the time being.
The tax on crude oil was up to Rmb30 ($4.54) per tonne under the old system and will increase significantly to around RmbB185 per tonne based on the average oil price of $75 per barrel.
© 2021 Euromoney Institutional Investor PLC. For help please see our FAQ.