China increases oil windfall tax threshold to $55/bbl

GUANGZHOU (ICIS)--China has raised the threshold on which domestic oil firms have to pay a windfall tax, in a move which could potentially save them billions of yuan (CNY) a year, analysts said on Friday.

The tax threshold has been raised to $55/bbl (€42.9/bbl) from 1 November 2011, from $40/bbl previously, according to filings by state-owned majors Sinopec and PetroChina to the Shanghai Stock Exchange.

China’s oil producers paid a tax on sales from crude sold above $40/bbl under a levy introduced in March 2006.

The levy will be calculated on a monthly basis and collected on a quarterly basis, according to the filings.

The new scheme is expected to reduce PetroChina and Sinopec’s levy payments by about CNY30bn ($4.77bn) a year, analysts said.