Notice of the Ministry of Finance of P. R. China and the State Administration of Taxation of P. R. China on Adjusting Consumption Tax Policy for Part of Fuel Oils

Directives to local Departments of Finance and local Offices under the State Administration of Taxation of P. R. China in each province, autonomous region, municipality directly under the Central Government, and municipality with independent planning status, and to the Finance Bureau of Xinjiang Production and Construction Corps:

In order to promote the healthy development of the olefin chemical industry and the fair competition among enterprises producing like products, approved by the State Council of P. R. China, the consumption tax policy for part of fuel oils is hereby adjusted as follows:

I As from January 1, 2010 till December 31, 2010, any consumption tax shall be exempted for domestic fuel oils used as raw materials for chemical products such as ethylene and aromatic hydrocarbon, and any consumption tax shall be refunded for imported fuel oils used as raw materials for such chemical products.

The fuel oils of fuel-oil manufacturers used for sale rather than raw materials for chemical products like ethylene and aromatic hydrocarbon shall be subject to the consumption tax as stipulated.

Chemical enterprises producing chemical products like ethylene and aromatic hydrocarbon shall recover the consumption tax in the event that they buy tax-free fuel oils for sale instead of using them for producing chemical products like ethylene and aromatic hydrocarbon.

As to the fuel oils purchased by enterprises from January 1, 2010 till the date of receiving the Notice, in the case of using them as raw materials for chemical products like ethylene and aromatic hydrocarbon, the consumption tax concerned shall be refunded.

II Chemical products like ethylene specifically refer to ethylene, propylene, butadiene & their derivatives, and other chemical products; And chemical products like aromatic hydrocarbon specifically refer to benzene, toluene, xylene, heavy aromatics, mixed aromatics, and other chemical products.

III Enterprises may, where their chemical products like ethylene and aromatic hydrocarbon made from fuel oils account for no less than 50% of their total production using fuel oils, enjoy the preferential policies specified in the Notice.

IV The tax exemption and refund administration on the consumption tax for fuel oils shall be implemented in accordance with the Notice of the State Administration of Taxation of P. R. China on the Issuance of "Administrative Measures for Consumption Tax Exemption on Naphtha" (GUOSHUIFA [2008] No. 45) and the Notice of the Ministry of Finance of P. R. China, the General Administration of Customs of P. R. China, and the State Administration of Taxation of P. R. China on Relevant Issues Concerning the Refund-after-Collection of Consumption Tax on Imported Naphtha (CAIYU [2009] No. 347).