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| The policy on excise duties of the processed oil including naphtha has been adjusted from January 1 |
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02-22-2008 |
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The statutory tax rates of naphtha， solvent oil， lubricating oil and fuel oil will work again， and there will be an exemption of excise duties for the imported naphtha， domestically made naphtha and domestically processed naphtha used as the chemical raw materials.
Recently， the reporter learned that since January 1 this year， the State made adjustments to the policy on excise duties of some processed oil including naphtha.
The Circular jointly issued by the Ministry of Finance （MOF） and the State Administration of Taxation （SAT） regulates that from January 1 this year， the unit tax rates of naphtha， solvent oil and lubricating oil will be RMB 0.20/ liter， and the unit tax rate of fuel oil will be RMB 0.10/ liter.
The Circular also regulates that， from Jan. 1， 2008 to Dec. 31， 2010， there will be exemption of excise duties for imported naphtha and the domestically made naphtha that is to be used as the raw materials of ethylene and aromatics products. The excise duty on the naphtha directly sold out by production enterprises shall be levied according to legal provisions. The specific measures for levy or exemption of excise duties on naphtha shall be separately determined by MOF and SAT.
The taxable consumption goods using the taxed naphtha， lubricating oil and fuel oil that are taken back by way of purchase or consigned processing as the raw materials， it is permitted that the tax money paid for the excise duties of the raw materials can be deducted from the payable tax amount of the excise duties.
The authority explained the background and reason for the adjustment of the policy on excise duties of some processed oil. He has said that on April 1， 2006， the State adjusted and improved the policies on excise duties， highlighting the principles to promote environmental production and the conservation of resources， reasonably guide the consumption and indirectly adjust the income distribution. Based on the principle， the State brought naphtha， solvent oil， lubricating oil and fuel oil into the levying scope of excise duties， and put these four materials together with diesel oil and gasoline to comprise the tax item of processed oil. Among them， the unit tax rates of naphtha， solvent oil and lubricating oil are RMB 0.20/ liter， the unit tax rates of diesel oil and fuel oil are RMB 0.10/liter， and the unit tax rates of leaded gasoline and unleaded gasoline are RMB 0.28/liter and RMB 0.20/liter respectively. Before this policy adjustment， in order to appropriately buffer the effect of policy adjustment on the oil refining enterprises， the State temporarily collected 30% of the amount of excise duties to be paid on naphtha and other newly added items. Within more than 1 year since the policy was adopted， it received good comments from different walks of the society， and the tax revenue steadily increased， basically meeting the set target.
At the same time， the authority has pointed it out that ethylene， the most important material in petrochemical industry， is the basic raw material for synthetic plastics， synthetic fiber， synthetic rubber， pharmaceuticals， dyestuff， pesticide， new chemical materials and daily chemical products and the most widely used basic organic chemical raw materials. Besides， aromatics products have become one of the most important basic chemical raw materials other than ethylene. Limited by production scale and resources of raw materials， China's output of ethylene cannot meet the domestic needs at present. Since about 55% of ethylene and downstream products and about 65% of the raw materials of chemical fiber rely on the import， the multinational companies from Europe， U.S.A and Middle East all take China as one of their important target markets and have vigorously expanded their market in China dependent on their advantages of scale， technology and resources. After China's entry into WTO， the tariff for the imported ethylene is only 2% and the temporarily set tariff is 0 at present， there is no import quota control， there has been almost the total price liberation of ethylene and downstream petrochemical products； U.S.A and countries from Europe and Middle East almost levy no excise duties on the raw materials for the production of ethylene， and the prices of the imported ethylene have determined the prices of domestically made ethylene and downstream products to some extent. Under such circumstances， it will narrow the profits of domestically made ethylene and downstream products and lower the competence of domestic ethylene sector to some extent if the excise duties are still levied on imported naphtha and the domestically made naphtha that is to be used as the raw materials of chemical products.
The authority has expressed that， from the perspectives of the unification of taxation and justice， there should be the restoration of statutory tax rate of excise duties levied on naphtha， solvent oil， lubricating oil and fuel oil. In light of the facts that domestic petrochemical enterprises have unfavorable competence and domestically made ethylene and aromatics products are facing fierce competition， the State has adjusted the policy on excise duties of the processed oil to temporarily exempt the excise duties of the imported naphtha and the domestically process naphtha that is to be used as the raw materials of ethylene and aromatics products so that the domestically made ethylene and aromatics products can better and fairly compete with the imported products. However， in order to plug up the taxation loopholes that enterprises sell the simply treated gasoline as naphtha， there is no exemption of excise duty on the naphtha directly sold out by production enterprises.
"This policy adjustment does not affect the prices greatly"， the authority was quoted as saying， and said that when theoretically computed， if the levy of excise duties according to the original statutory tax rates， the unit excise duty for per liter of oil products only went up by RMB 0.07 to RMB 0.14； taking the lubricating oil with lowest ex-factory price as the example， the increased tax burden does not even account for 1% of the ex-factory price of the lubricating oil. Hence， if the issue of excise duty of naphtha that is used as chemical raw materials， the restoration of policy to collect excise duties according to statutory tax rates will not impose too much influence on prices. |
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