China’s stimulus plan for petrochem and refining industry to exclude changes to windfall taxes

02-Mar-09

China’s State Council has approved a stimulus plan for the industry to help spur growth in the slowing economy earlier this month. The government will seek to boost domestic demand, increase stockpiles of oil products, improve tax policy and expand loans for petrochemical companies. China’s stimulus plan for the petrochemical and refining industry to be unveiled after mid-March, will exclude changes to windfall taxes levied on state oil producers. Chinese oil producers pay a tax on revenue from crude sold for over US$40 a barrel under a levy introduced in March 2006. A proposal submitted by China Petroleum and Chemical Industry Association recommends raising the trigger level by about US$20 for the tax to help oil producers including PetroChina Co. and China Petroleum and Chemical Corp.