China refunds VAT on some imported oil products of PetroChina and Sinopec

China refunds VAT on some imported oil products of PetroChina and Sinopec
(www.chinamining.org)

  China would refund value-added tax (VAT) levied on some of PetroChina and Sinopec's imported oil products between April 1 and June 30, the Ministry of Finance (MOF) said in a statement on its website on Tuesday.

   The MOF said the move had been approved by the State Council, China's Cabinet.

   These oil products included 500,000 tonnes of gasoline and 1 million tonnes of diesel oil from PetroChina, the country's largest oil producer, and 500,000 tonnes of gasoline and 1.5 million tonnes of diesel oil from Sinopec, the country's largest refiner, said the statement.

   However, the statement did not mention the details of how the value-added tax would be first paid and then refunded to these two oil companies.

   Some industry experts said that government-controlled oil prices in the domestic market has led to the recent shortfall of oil supply, as refineries cut back production to avoid losses against the backdrop of crude oil price rise globally.

   Current VAT rate on gasoline and diesel import is 17 percent.

   The country's demand for oil products is surging this year, stimulated by the quick pace of economic development, the Spring ploughing season and restoration work in snow and ice hit areas this winter in south China.

   Figures showed that the country's net oil product imports stood at 5.47 million tonnes in the first quarter, up 31.8 year on year.

   There was market hearsay last week that Sinopec was applying for a rebate of three-quarters of its value-added tax on its crude import to offset a larger refining deficit.

   Before that, the company also applied to postpone handing in a special oil gain levy and cut the import tariff on product oil. Experts say that if it does, the policy could reduce the refiner's cost by 12.75 percent, which will be helpful for Sinopec's suffering refineries.

   Encouraged by the news, PetroChina (PTR.NYSE; 0857.HK; 601857.SH) A-share closed up 0.89 percent to 17.06 yuan per share and Sinopec (SNP.NYSE; 0386.HK; 600028.SH) A-share ended up 1.66 percent to 11.00 yuan per share.