Import Data News
- Govt. to suspend diesel import tax
Date: 20-Dec-2007 Sources: (Shenzhen Daily)
THE government would suspend the 17 percent value-added tax (VAT) on imported diesel from December to the first quarter of 2008 to trim import losses caused by high international prices, an official with a domestic oil company said yesterday.
'The suspension will be applied only when a company imports a certain minimum volume of diesel,'said the official, adding the exact requirement on import volumes was unclear.
The already collected VAT would be refunded to importers after the final notice was issued, said the official, who is familiar with China's diesel imports.
The world's second-biggest energy user might wipe off the VAT totally next year as retail prices stay regulated even in the face of high international prices, another source said.
'There are discussions on that, but I haven't seen a final notice,'he said.
The news emerged the same time that the country's top refiner Sinopec Corp. bought an additional 90,000 tons of diesel for import next month, taking its tally to 240,000 tons so far, while rival PetroChina wrapped up January diesel buying at 300,000 tons.
The two firms bought about 200,000 tons in November, the highest since late 2004, and a record-high of 823,000 tons in December, according to trade estimates, after being told to fulfil their 'social responsibility?in ensuring adequate supply as China faced its worst fuel crisis in four years.
Lifting the biggest share of the tax burden may be a sign that the government is bracing for a sustained wave of imports and wants to ensure the country's State-run firms keep the market well supplied.
'This is a small gesture to help them to recoup some of the losses and give them motivation to ensure adequate supplies, especially just about 200 days before the Beijing Olympics Games,'said Gordon Kwan of CLSA.
Industry sources said imports were still marginally negative given the remaining tariff of 2 percent and consumption tax of 117.60 yuan (US$15.94) a ton.
The last time China granted a tax break was in 2005 for the exemption of the tariff on imports and the following year saw the reduction of the tariff to 2 percent from 6 percent.
Although the government raised domestic diesel retail prices by 500 yuan a ton from Nov. 1, domestic diesel prices were still at least 800 yuan a ton lower than international prices, taking into account freight rates and taxes, said traders.
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