Gushan Environmental express views on consumption tax

Gushan Environmental Energy Ltd. (Gushan) announced that it has temporarily suspended production at Fujian Gushan Bio-diesel Energy Co. Ltd. (Fujian Gushan) due to a dispute with a local tax authority concerning consumption tax issues. Following recent changes to PRC regulations on consumption tax rates to be levied on diesel products, which took effect on January 1, 2009, Gushan told the State Administration of Taxation of Fujian Province (Fujian SAT) that its biodiesel, which is produced from used cooking oil, vegetable oil offal and jatropha oil, should not be subjected to the consumption tax. Gushan was subsequently informed that Fujian SAT and the Fujian Municipal Finance Bureau jointly issued a written proposal to the PRC State Administration of Taxation (PRC SAT) requesting that biodiesel products without petroleum-based diesel content be specifically excluded from paying consumption tax. Pending resolution of this issue with the provincial and national authorities, Gushan has not paid consumption tax on its sales of biodiesel during the first quarter of 2009. (June 4, 2009)