| Abstract: | China's foreign-oriented oil taxation system has, from the beginning, been based upon the positive experiences of other oil-producing countries and has incorporated common international practices. The system has been perfected aver decades. It offers more incentives than other oil-producing countries in the following four aspects - (1) Income tax has a "wide tax base and low tax rate" ; (2) VAT levies a low tax rate on materials; (3) Royalties are levied, but there is a temporary exemption for the resource tax and the compensation fee for mining resources; (4) the "Ninth Five-Year Plan" period has decreed the following; (a) the preferential tax policy continues to exempt from importation taxes those equipment and material imported by projects for exploration and exploitation of offshore oil and natural gas , with some appropriate adjustments; and (b) subject to approval by the State Council, in certain areas -where domestic manufacturers cannot produce equipment and material, or their quality cannot meet the exploration and exploitation requirements, imported equipment and material are exempted from tariff and importation taxes. China will continue to improve and perfect its foreign-oriented oil taxation system. The main oil taxation issues that must be solved immediately include five aspects, one of which is how to enhance the recovery of oil from old oil fields. |
