China Plugs Tax Loophole With Import Levies for Key Blending Fuels, says an article on Today Online.
Hefty taxes
China will introduce hefty taxes on imports of light cycle oil (LCO), mixed aromatics, and diluted bitumen from June 12 aiming to curb imports blamed for worsening a fuel surplus and polluting the environment.
Authorities in south China have recently cracked down on illicit trade and sales of LCO, a blending fuel for diesel.
The charges will inflate the cost of buying from regional suppliers such as South Korean refiners and international traders which in recent years have sold China record volumes of these fuels cashing in on tax loopholes.
“A small number of companies have imported record amounts of these fuels and processed them into sub-quality fuels which were then funneled into illicit distribution channels, threatening fair market play and also causing pollution,” the Ministry of Finance said in a statement.
“This is drastic news,” said a Singapore-based trader.
Affect Gasoil cracks
“It will affect gasoil cracks going forward as potentially there will be more supply of gasoil in the region,” he said, referring to refiners’ margins for the product.
The tax will bolster domestic prices of diesel and gasoline in a boon for state refiners, said local consultancy Sublime China Information.
China will impose a 1.52 yuan ($0.2363) per liter consumption tax on imported LCO and mixed aromatics, the latter a blending component for gasoline.
The levy on diluted bitumen will be 1.20 yuan per liter.
While the tax move on LCO and mixed aromatics have been long-mooted, the charge on diluted bitumen came as a surprise, traders said.
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Source: Today Online
