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China Proposes A 10% Tax On Crude Oil Output

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

20 December 2007


A 10% resource tax has been proposed for crude oil output by China's Finance Ministry this week, according to reports.

The tax is likely to be phased in, with a 5% rate to be imposed initially, but no start date for the policy has yet been confirmed.

The proposed move has reportedly received criticism from some quarters, with observers suggesting that it could result in increased domestic oil prices and a resultant drop in investment in the sector.

Speaking to XFN News, Gordon Kwan, oil and gas analyst with CLSA, a provider of equity brokerage, investment banking and asset management services in the region announced that despite the positive environmental motivation behind the planned tax: "I don't think it is a good solution."

He went on to observe that:

"The US had a similar tax system but it scared away investment and output declined. They have become more dependent on imports."


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