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China Raises Windfall Tax Floor for Oil Firms

01-06 11:12 Caijing

The threshold was raised to 55 U.S. dollars a barrel from 40 dollars from November 1;PetroChina will pay 30 billion yuan less in the windfall tax every year

China has raised the threshold on a windfall tax on oil firms including PetroChina Co., and China Petroleum & Chemical Corp., reducing taxes substantially for the oil giants.

The threshold was raised to 55 U.S. dollars a barrel from 40 dollars from November 1, China Petroleum & Chemical Corporation, known as Sinopec, said in a statement Thursday.

PetroChina, the country’s biggest oil producer, will pay 30 billion yuan less in the windfall tax every year, the 21st Economic Herald reported, quoting an industry analyst without giving the person’s name.

Take high oil prices in 2011. PetroChina only needs to pay 95 billion yuan after the government raised the tax floor, compared with 120 billion yuan otherwise it would have paid, the source said.

With rising oil prices internationally in 2010, PetroChina has paid 52.17 billion yuan in the so-called special oil income levy, or 1.6 time-folded from the previous year. Earnings per share for PetroChina were 0.76 yuan in the same year, according to the company’s annual report.

Starting from the same day, the country’s top economic planner announced the implementation of a value-based tax on oil and gas sales nationwide. The change in the windfall tax will offset the 5-10 percent resources, Bloomberg said quoting Gordon Kwan, the Hong Kong-based head of regional energy research at Mirae Asset Securities HK Ltd.

“This is good for the three major oil companies and the major oil players” from overseas, Kwan said. “Anyone operating in China has to pay the windfall tax.”

 

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