ANNOUNCEMENT 04 Mar 2016

March 4th, 2016 - the Chinese State Administration of Taxation released Notice No16/2016, which reduced the fixed price of imported natural gas, both liquefied and pipeline. The prices will be controlled through VAT adjustments.

NUMBER OF INTERVENTIONS

2

  • 1 harmful
  • 0 neutral
  • 1 liberalising

SOURCE

PRC State Administration of Taxation, March 4th, 2016. (关于调整进口天然气税收优惠政策有关问题的通知)
http://www.chinatax.gov.cn/n810341/n810755/c2103148/content.html

PRC State Administration of Taxation, August 1st, 2011 (财关税[2011]39号)
http://www.mof.gov.cn/pub/guanshuisi/zhengwuxinxi/zhengcefabu/201108/t20110815_586616.html

Inception date: 01 Jan 2016 | Removal date: 31 May 2017
Still in force

Import incentive

On the 4th of March 2016, the Chinese State Administration of Taxation reduced the domestic sales price for imported natural gas. To incentivise gas imports, the Chinese government rebates the VAT on imported natural gas when the import price exceeds the desired domestic price.

By reducing the price, imports are more incentivised, hence the green classification of this intervention.

Through its decree, the Chinese government reduced the sales price of natural gas as follows:

October-December 2015:

  • LNG: from USD 5.92 to 5.12 per gigajoule (CNY 38.82 to 33.58);
  • Pipeline: from USD 0.209 to 0.182 per cubic metre (CNY 1.37 to 1.19).

From January 2016:

  • LNG: from USD 5.12 to 4.32 per gigajoule (CNY 33.58  to 28.34);
  • Pipeline: from USD 0.18 to 0.15 per cubic metre (CNY 1.19 to 1.00).

The change is effective retroactively from 1 January 2016. Excess VAT paid on prior imports will be credited accordingly.

AFFECTED SECTORS

 

AFFECTED PRODUCTS

 
Inception date: 01 Jan 2016 | Removal date: 31 May 2017
Still in force

Tax or social insurance relief

In addition to the above, the Chinese natural gas rebate policy simultaneously consitutes a discriminatory treatment of unknown users of the natural gas imported through the scheme, as imported LNG benefitted from the rebate.

 
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