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Profit tax on oil exploiters launched

(Shanghai Daily)
Updated: 2006-04-04 15:22

China begun the levying of a special tax on oil exploiters as part of efforts to ease the pressure of downstream companies in the oil industry from the rising oil prices.

The State Council and the Ministry of Finance have jointly issued a scenario, saying that the country will impose the tax from March 26, if prices of domestically produced crude oil exceed US$40 per barrel, China Petroleum and Chemical Corp, also known as Sinopec, said in a statement on its Website today.

The tax will be calculated every month, and companies should hand in their payment every quarter, according to Sinopec's statement.

The money these companies pay will be used as a source of the government's subsidy to the downstream companies which are hurt by the rising oil prices, the Shanghai Securities News said.

Sinopec, Asia's biggest oil refiner, said so far it cannot estimate how much the tax will affect the company's profits because of the fluctuations in the international crude prices, yuan's exchange rate and the company's monthly output.

But it also said if the international crude price goes beyond US$40 a barrel, the tax will expand the company's expenditure and affect the proceeds.