China clamps down on refiners, traders and operators with new policy

Industry sources said the Chinese government’s move to tighten tax rules as a way to prevent domestic blenders and “teapot” refiners from avoiding payment of a RMB812 (US$128.5)/metric ton (mt) consumption tax on their purchases of domestic or imported fuel oil will most likely raise costs and erode margins.
To clamp down on refiners, traders and other operators who evade taxes by declaring taxable oil products under other names, the State Administration of Taxation earlier this month released a series of measures. Starting January 1, 2013, producers who want consumption tax exemptions are required to submit a “quality inspection certificate” to the taxation bureau. Industry observers said the policy will make it hard for sellers or importers to declare fuel oil as asphalt, for example, which is exempt from consumption tax.
China’s consumption tax is imposed on companies and individuals that are engaged in the production, processing or importing of taxable consumer goods. (November 27, 2012)