Major News | Coal-based oil exempt from consumption tax for five years!

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This post was last edited by liaifeng on 2018-8-18 10:06. Major news | Tax exemption on coal-based oil for five years! Author/Source: Date: 2017-02-13 Clicks: 19 On February 10, it was learned from the State-owned Assets Supervision and Administration Commission of Ningxia Autonomous Region that, as a result of efforts by the relevant departments in the region, **a preferential policy granting a 5-year exemption from consumption tax for coal-to-oil demonstration projects was approved. After more than a decade, Shenhua Ningmei’s \"coal to oil\" project was officially put into operation on December 28, 2016. However, **there is still a lack of supporting policies to encourage and support the development of new, green energy projects.** Especially in terms of tax policies, the same regulations as those applied to oil-based oils are still in use, which severely restricts and hinders the survival and development of coal-to-oil projects. To help enterprises reduce the production costs of coal indirect liquefaction projects, the Political Consultative Conference of Ningxia Autonomous Region took the lead in submitting a proposal to **the relevant ministries and commissions titled \"Proposal on Introducing Tax Policies Related to Coal-based Oil Products to Promote the Clean and Efficient Utilization of Coal\"\" (hereinafter referred to as the \"Proposal\"). This proposal calls for the introduction of a specific consumption tax on the coal-based oil products industry. The «Proposal» suggests exempting consumption tax when crude oil prices fall below a certain level; once crude oil prices rise, a tiered taxation policy can be implemented based on the overall profitability of the coal-to-oil industry, in order to enhance its market adaptability. At present, after consideration by 7 ministries and commissions including the National Development and Reform Commission and the State Taxation Administration, the recommendations put forward in this key proposal have been approved to grant coal-to-oil demonstration projects a preferential policy of exemption from consumption tax for 5 years. Analysts in the coal-to-oil industry say that currently, a consumption tax of 1,411 yuan per ton is imposed on diesel products, and 2,105 yuan per ton on naphtha; just this consumption tax alone accounts for nearly 30% of the costs, significantly reducing the profitability of coal-to-oil projects. During 2016, Luo Chuntao, director of the Coal Chemicals R&D Center at Shenhua Ningmei Group, said that the estimated investment for Shenhua Ningmei’s 4 million tons per year coal indirect liquefaction demonstration project was 55 billion yuan; it is one of the largest chemical projects in terms of initial investment in the global petrochemical and coal chemical industries. The project investment was entirely covered by Shenhua Ningmei Group Company, and it basically did not benefit from any support policies. Given that current international oil prices are at historic lows, the day the project goes into operation is also the day heavy losses begin.