Consumption tax evasion enables refiners to make money

摘要

Singapore-Part of the reason for the success of the independent refineries lies in China’s complicated administrative structure which allows these refiners to get around a hefty tax rate that their state-owned counterparts must pay diligently. China charges a consumption tax on oil products. While the tax is passed on to the end-user, it is initially paid by the refiner or producer of the oil product. The current consumption tax on gasoline is Yuan 2,110/mt, or $38/ barrel, and on gasoil is Yuan 1,411/mt, or $29/barrel. The consumption tax, however, has a caveat. If a refiner uses fuel oil as feedstock to produce their final product, as has traditionally been done by China’s independent refiners, they do not need to pay a consumption tax on the end product because the assumption is that they would have paid the consumption tax on fuel oil.