State Council amends three sets of interim resources tax regulations

On 30 September, the State Council announced its Revision of the PRC Resources Tax Interim Regulations Decision (State Council Decree No. 605). The Interim Regulations were first promulgated by it on 26 November 1993. Also on 30 September, the State Council also made two decisions to amend the PRC Cooperation with Foreign Countries in the Exploitation of Onshore Petroleum Resources Regulations (State Council Decree No. 606) and the PRC Cooperation with Foreign Countries in the Exploitation of Offshore Petroleum Resources Regulations (State Council Decree No. 607) accordingly. The decision to amend the interim resources tax regulations is intended to increase the tax revenue collected in the place where the resources are located and to boost energy conservation and emission reduction, while the other two decisions are made to align with the relevant modifications to the interim resources tax regulations and introduce a unified tax regime for all kinds of resources taxes and dues to be levied on oil and gas enterprises.

More taxpayers caught in the net

Under the amended interim resources tax regulations, resources tax taxpayers “within the territory of China”, as specified in the original regulations, will now include entities and individuals that exploit minerals and produce salt “within the territory of China and the sea waters under the jurisdiction of China”.

Changes in tax calculation

Before the amendments were introduced, resources taxes were all calculated by the “assessment-by-quantity” method (the sales volume of taxable resources products multiplied by a specified tax on an entity). Under the amended interim resources tax regulations, resources tax on crude oil and natural gas will be calculated by the “rate fixing-by-prices” approach (sales revenue from taxable resource products multiplied by a specified percentage. The tax rate is 5% to 10% of the sales). The calculation of resources tax on other products remains unchanged for the time being.

Business Law Digest is compiled with the assistance of Haiwen & Partners. The authors can be emailed at baochen@haiwen-law.com. Readers should not act on this information without seeking professional legal advice.