China to give crude tax rebate to help refiners

BEIJING (Reuters) – China has agreed to grant a hefty tax rebate on crude imports to help oil firms limit heavy refining losses, instead of increasing fuel prices that would stoke inflation, a government source said on Monday.

Under the scheme proposed by oil firms and endorsed by the State Council last month, Beijing is set to cut the 17 percent value-added tax on crude imports by three-quarters, said the official source familiar with the policy.


The tax plan, which some analysts expected may take effect as early as this month, would save Beijing from making the controversial move of raising pump fuel prices at a time of 11-year high inflation.

“A tax rebate like this will avoid adding pressure to the CPI, while giving companies such as Sinopec a significant subsidy,” said Liu Bo, a Shanghai-based oil and chemicals sector analyst for Guojin Securities, adding that he heard the same proposal from his government contacts.

“It’s a more appropriate approach, to subsidise whoever imports more crude.”

Reuters