China cancels naphtha consumption tax for chems

19 February 2008 07:53  [Source: ICIS news]

SINGAPORE (ICIS news)--China has stopped collecting naphtha consumption taxes from petrochemical makers nearly two years after the controversial tax was launched, producers said on Tuesday.

 

Local cracker operators welcomed the move as they have been lobbying for its removal since the yuan (CNY) 0.06/litre ($0.008/litre) levy was introduced in April 2006.

 

Sinopec and PetroChina produced naphtha which was used captively, they said, adding that other petrochemical makers would have already paid taxes on naphtha imports.

 

The Ministry of Taxation cancelled the consumption tax on naphtha, used as a feedstock in the making of ethylene and aromatics, with effect from 1 January 2008 to 31 December 2010, it said in a statement last week. This would make local petrochemicals more competitive than imported ones, the ministry added.

 

However, it imposed a CNY0.2/litre consumption tax for naphtha used for other purposes and lubricants. The consumption levy on fuel oil was at CNY0.1/litre, the ministry said.

 

In April 2006, the ministry slapped a CNY0.2/litre consumption tax on naphtha, but quickly cut it down to CNY0.06/litre following feedback from the Chinese majors.

 

 

($1=CNY7.17)

By: Florence Tan
+65 6780 4359

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