ANNOUNCEMENT 17 Oct 2018

October 17th, 2018 - The Chinese government published an update to its policy which guarantees domestic importers a certain price on natural gas.

NUMBER OF INTERVENTIONS

4

  • 2 harmful
  • 0 neutral
  • 2 liberalising

SOURCE

PRC State Administration of Taxation, October 17th, 2018. (财关税〔2018〕36号 关于调整天然气进口税收优惠政策有关问题的通知)
http://www.chinatax.gov.cn/n810341/n810755/c3914099/content.html

Inception date: 01 Apr 2018 | Removal date: 30 Jun 2018

Import incentive

On October 17th, 2018, the Chinese State Administration of Taxation increased the target 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 increasing the target price, imports are less incentivised, hence the red classification of this intervention.

The raise was carried out in two stages, the first stage being as follows:

  • April-June 2018:
    • LNG: from USD 3.97 to 4.06 per gigajoule (CNY 27.49 to 28.06)
    • Pipeline: from 0.140 to 0.143 USD per cubic metre (CNY 0.97 to 0.99)

Please see the other pertinent intervention associated with this state act for information on the next stage, when the price was reduced.

The measure is effective retroactively for the relevant periods. Excess VAT paid on prior imports will be credited accordingly.

AFFECTED SECTORS

 

AFFECTED PRODUCTS

 
Inception date: 01 Apr 2018 | Removal date: 30 Jun 2018

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.

In this case, this represents an overall liberalisation, hence the green classification of this intervention.

 
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Inception date: 01 Jul 2018 | Removal date: open ended

Import incentive

On October 17th, 2018, the Chinese State Administration of Taxation increased the target 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 decreasing the target price, imports are more incentivised, hence the green classification of this intervention.

The first stage was implemented from April 2018 (see other intervention associated with this state act for more on that), with the second stage as follows:

  • From July 2018 onwards:
    • LNG: from USD 4.06 to 3.95 per gigajoule (CNY 28.06 to 27.35)
    • Pipeline: from 0.150 to 0.140 USD per cubic metre (CNY 0.99 to 0.97)

The measure is effective retroactively for the relevant periods. Excess VAT paid on prior imports will be credited accordingly.

Inception date: 01 Jul 2018 | Removal date: open ended

Tax or social insurance relief

In October 2017, the Chinese government announced it was altering the target sales price for imported natural gas.

The second stage of the announcement decreased this target price. This incentivised imports, but also constitutes a discriminatory sector-specific preferential tax for unknown users of natural gas, hence the red classification of this intervention.

 
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