Authorities: Tax reform won't affect oil price
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China.org.cn, October 25, 2011
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Excavators remove iron ore at the port of Qingdao, a coastal city in east China's Shandong Province, Sept. 7, 2011. [Photo/Xinhua] |
China's recent resource tax reform will not influence its domestic prices for oil and natural gas, the Ministry of Finance (MOF) and the State Administration of Taxation said Monday.
China's pricing mechanism for oil products is mainly based on the international oil price trend, which would not be influenced by the adjustment of the sales value-based tax rates, the two departments said in a joint statement issued on the MOF website.
The adjustment in resource taxes might bring down the profits of oil producers, but it will not affect the market price of oil products, said the statement.
The domestic oil price is more likely to be influenced by global factors, including international speculation, the exchange rate of the US dollar, and supply and demand in the global market, the statement said.
China's current resource tax is levied based on production volume instead of sales value, thus preventing the government from benefiting from energy and commodity price increases.
A resource tax on oil and natural gas was introduced at a rate of five percent in northwest China's Xinjiang Uygur Autonomous Region on June 1, 2010 before being extended to 11 other provinces in December last year.
The State Council, or China's cabinet, announced earlier this month it will tax all resource products starting Nov. 1, extending the resource tax on domestic sales of crude oil and natural gas from some regions to the entire country.
The expansion of the resource tax is part of China's efforts to encourage energy conservancy and limit environmental damage.
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