Xie Xuren explained that the levy, which has been trialled in some of the country’s poorest regions, will be extended to re-balance tax revenues between central and local governments.
Speaking to Chinese media, Xie said 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.
The pilot scheme was initially tested only in the Xinjiang Uygur Autonomous Region and applied to all taxpayers that exploit crude oil and natural gas in the north-west.
As oil and natural gas prices continue to rise, the charge is likely to increase the tax burden of upstream oil and gas companies. The tax on crude oil was up to Rmb30 ($4.54) per tonne under the old system which will increase significantly to around RmbB185 per tonne based on the average oil price of $75 per barrel.
When and how the nationwide rollout will take place is still unknown.
