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Ma Jun:Current Situation of China’s Resource Tax

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China had not taxed natural resources until 1984 since the founding of the People’s Republic. In October 1984, China replaced profit delivery with taxes for the second time and reformed its industrial and commercial taxation system. Resource tax was a new tax item born in this reform. There were few purposes: 1) to promote rational exploitation of state owned resources, economize on resource use and allocate them more efficiently; 2) to adjust revenue disparities caused by resource distribution and ensure fair competition among all units and individuals engaged in the exploitation of mineral products; 3) to generate some fiscal revenues to make sure fiscal revenue grow steadily with economic development after the fiscal and tax reform.

 

“The Provisions of National Resource Taxes of the People’s Republic of China” enacted on January 1, 1994, levies resource tax on all units and individuals who exploit mineral products as prescribed in these Regulations or produce slat within the territory of the People’s Republic of China according to the amount of production, sold or self-consumed. Resource tax applies to specific items in accordance with the attached to these Regulations as well as the relevant stipulations of the Ministry of Finance according to the amount. Most taxable items are levied on unit basis. Others(crude oil and natural gas) are levied on an ad valorem basis. As the former, in the process of actual taxation, the grades of mineral products are taken into consideration, the higher the grade, and the more the taxes. Institutions who buy untaxed products are withholding agents of resource tax. Resource tax is a shared tax with tax revenues from offshore oil belonging to the central government and others to sub-national governments. Taxable items and rates are as follows:

 

Taxable Items and Tax Amount Range/Tax Rates of Resource Taxes

Taxable Items Tax Amount Range/Tax Rates
Crude oil  5%-10% ad valorem 
Natural gas  5%-10% ad valorem 
Coal Coking coal 8-20 yuan/ton 
Non-coking coal 0.3-5 yuan/ton 
Other non-metal ores Common 0.5-20 yuan/t 
Valuable 0.5-20 yuan/kg or ct 
Ferrous metal  2-30 yuan/t 
Non-ferrous metal  Rare Earths 0.4-60 yuan/t 
Other non-ferrous metal 0.4-30 yuan/t 
Salt Solid salt 10-60 yuan/t 
Liquid salt 2-10 yuan/t

Source: The Provisions of National Resource Taxes of the People’s Republic of China enacted on November 1, 2011.