New Tax Break For Chinese Energy Sector

August 24, 2011 Taxation in China

Tax Break For Chinese Energy SectorChina will soon grant tax rebates on the Value Added Tax paid by state energy companies when selling imported natural gas.

As announced by the Ministry of Finance on August 22nd, the new measure is aimed at reducing the losses incurred by the companies when selling imported gas at the prices set by the government, as the import price often exceeds the national sale price.

The new rebate policy will only cover government approved companies, and will apply to sales made between the January of this year, and the end of 2020. Tax rebates can also be applied retroactively to the sale of all natural gas imported last year through the Central Asia – China natural gas pipeline.

China’s state energy companies are importing increasing quantities of natural gas, with the rise is part of China’s long-term strategy to boost use of clean energy sources. Within the next 10 years China’s demand for natural gas is expected to rise to 300 billion cubic meters annually, and imported gas is projected to make up one third of the total.

Photo by karathepirate