DSG02-2C2 Series Direction Valves Dsg02-2C2 Series Direction Valves,Solenoid Direction Valve,Direction Valve,Hydraulic Solenoid Directional Valve Shanghai Jinhai Hydraulic Co.,Ltd , http://www.shanghaijinhai.com
On February 2, the Ministry of Finance and the State Administration of Taxation issued a notice adjusting certain refined oil consumption tax policies. Industry observers noted that the new regulations on naphtha represent a significant shift from the policy introduced in April 2006. Back then, naphtha was grouped with solvent oil, lubricating oil, and fuel oil under the excise tax, with a rate of 0.2 yuan per liter for naphtha, lubricants, and solvents, and 0.1 yuan per liter for fuel oil. The 2006 policy also included a temporary 30% tax collection to ease the burden on large-scale ethylene producers.
The new notice, effective from January 1, 2008, to December 31, 2010, states that domestically produced naphtha will be fully taxed according to the rules. However, imported naphtha and domestic naphtha used as raw materials for ethylene and aromatics production are exempt from the tax. This adjustment aims to support domestic petrochemical industries while promoting resource conservation.
Zhou Dayi, a researcher at the National Development and Reform Commission’s Energy Research Institute, highlighted that maintaining low energy prices through administrative measures may offer short-term relief from inflation but could distort market supply and fail to reflect resource scarcity, leading to wasteful consumption.
Ethylene, a key raw material for plastics, synthetic fibers, and other products, remains in high demand in China, where domestic production still falls short. Dong Xiucheng, deputy dean of the School of Business Administration at the University of Petroleum, emphasized that the revised policy is a continuation of the 2006 framework, aiming to better manage petroleum product consumption and conserve resources.
The policy also benefits the domestic production of aromatic hydrocarbons, which are vital for chemical manufacturing. With China heavily reliant on imports, the tax exemption on naphtha used in ethylene and aromatics production is expected to enhance domestic competitiveness against foreign imports.
Additionally, the policy encourages naphtha imports by offering tax exemptions, which is crucial given the growing demand from new ethylene projects. According to customs data, naphtha imports surged in 2006, driven by increased demand from new facilities like the PX plant in Qingdao. As more ethylene projects come online, naphtha imports are expected to rise significantly.
Experts also note that the policy helps advance the reform of refined oil pricing mechanisms. While full price liberalization is not expected in 2008, gradual adjustments are likely to ensure fair competition and reflect market conditions.
However, the policy may increase costs for companies outside the major state-owned enterprises, such as PetroChina and Sinopec, which benefit from tax exemptions. Smaller firms relying on imported or taxed naphtha may face higher expenses, especially with rising international oil prices.
In summary, the new tax policy reflects broader economic and environmental goals, balancing industry needs with resource management and long-term reform. It underscores the government’s effort to promote sustainable development while supporting strategic sectors of the economy.