China May Start 3 Percent to 5 Percent Sales Tax on Coal

Xinhua News Agency reported that a 3% to 5% tax on sales of coal is likely to replace the current tax on output as China expands its resource tax reform program, the Economic Information.

Experts interviewed by the newspaper said it is a trend for the government to include coal in the new resource tax mechanism to boost local government coffers and conditions have matured for expanding the tax reform to more regions.

Currently a tax of CNY 3 per tonne to CNY 8 per tonne of output is levied on coal producers roughly equal to 1% of their sales revenue. Market expectation about including coal into the resource tax reform became stronger after a proposal for China economic and social development in the next five years (2011-15) was adopted at a plenary session of the Central Committee of the Communist Party of China last month.

The proposal said that China will continue to push forward its resource tax reform and sort out price relations of resource products including coal, electricity, oil, gas, water and minerals.

In June, the Xinjiang Uygur autonomous region piloted a resource tax reform program by introducing a new sales tax on producers of crude oil and natural gas.