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It was recently learned from the State-owned Assets Supervision and Administration Commission of the Ningxia Hui Autonomous Region that, following discussions by **seven ministries and commissions, a preferential policy has been approved granting coal-to-oil demonstration projects a 5-year exemption from consumption tax. This policy has been submitted to the State Council for approval. This policy package has caused a stir in China’s coal chemical industry. It is widely believed that the domestic coal-to-oil industry is trapped in a situation characterized by low oil prices and high coal prices; this favorable policy will play a pivotal role in facilitating the upgrading of the legitimate coal-to-oil production facilities during the 13th Five-Year Plan period, as well as in promoting the sustainable and healthy development of the entire modern coal chemical industry. Previously, coal-derived oil products were subject to consumption tax in the same way as regular refined oil products. “Compared to oil refining projects subject to a consumption tax based on volume, coal-to-oil projects require large investments and high fixed costs, while the selling price of their products fluctuates with crude oil prices. The current consumption tax policy was introduced early on, without taking into account the need for differentiated treatment for coal-to-oil projects. I’m not sure how it will be implemented – will the prices of coal-derived oil products be reduced so that no taxes are imposed, or will the original prices remain unchanged with no taxes? Furthermore, does it apply only to coal-to-oil processes, or also to other coal chemical enterprises that produce by-products as well as oils? Please share your opinions!