China Extends Resource Tax Reform

by Mary Swire, Tax-News.com, Hong Kong

11 May 2016

China's Ministry of Finance has announced the extension of ad valorem resource taxes to certain minerals with effect from July 1, 2016.

The Chinese Government first extended nationwide a new resource tax based on value, rather than volume, in November 2011. Since then, the taxation of such resources as crude oil and natural gas, coal, and rare earths have been changed.

The Government believes that the resource tax reform, when fully implemented, will: improve the pricing mechanism of resource products by taking account of the differences between China's producing regions; promote coordinated and enhanced regional development; and enable the conservation and environmental exploitation of resources.

It is intended that the resource tax rates imposed should take account of the economics involved in the production of each mineral, so that the overall tax burden on producing companies should not be increased. It is also to be expected that the water production and forestry industries will be subject to resource taxation in the future.

On May 9, the Ministry disclosed the range of ad valorem tax rates for a further 21 resources, for: iron ore, gold, copper, bauxite, carbonate-hosted lead-zinc ore, nickel, tin, graphite, diatomaceous earth, kaolin, fluorite, limestone, iron pyrite, phosphate ore, potassium chloride and sulfate, mineral and lake salt, underground salt brine extraction, coal seam gas, and clay, sand, and gravel.

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