China's petroleum tax reform accelerates flexible tax rate and changes oil prices

Master Wang of Beijing New Moon Taxi Co., Ltd. has been particularly upset recently: not only has the new taxi Elantra been replaced, but the rising oil prices have finally begun to fall. "Now we earn more than $30 a day more than before!" May 24th The National Development and Reform Commission announced that it would cut oil prices in an all-round manner. This is the first time since the price of oil has risen all the way in the past two years. At the same time, a policy concerning the development of the oil industry is under intense brewing. A few days ago, the reporter learned from the State Administration of Taxation that relevant parties are conducting feasibility studies, preparing to reform the existing rigid petroleum resource tax model, and adopting a more flexible and flexible taxation system. At the same time, tax changes and difficulties in mining are taken into account when taxation.
The above news has also been confirmed by people in the industry. On May 27, at the “China Energy Strategy High-Level Forum” of the Beijing Science Fair, the vice president and secretary-general of the China Petrochemical Industry Association Pan Derun stated that the reform of the petroleum tax system should be referred to the oil development strategy and a flexible tax system should be implemented. Increase the policy support for the exploration and exploitation of domestic oil and gas resources.

“China should speed up the pace of reform of the tax system before the full liberalization of the oil market at the end of 2006, and Sinopec has proposed to the relevant departments that the current value-added tax levied on production should be levied on consumption.” May 27, Sinopec Sales Zhang Haichao, party secretary of the company, told reporters.

According to the commitments made to the World Trade Organization, China opened the domestic petroleum product retail market on December 11, 2004. China will also open the distribution market for petroleum refining products on December 11, 2006.

Zhang Haichao stated that Sinopec hopes that the government can achieve an orderly opening of the oil market and assist in the development of the petroleum product distribution industry.

“Petroleum tax reform is an important part of China's energy strategy.” Officials from the National Development and Reform Commission’s Energy Bureau stated that petroleum tax reform includes policy support and oil legislation, energy conservation, overseas strategy, diversification of import trade, alternative fuels for petroleum, and strategic reserves. Seven measures. "Extending the VAT reform pilot project to petroleum and petrochemical enterprises, the value-added tax has been changed from a production type to a consumption type, and the value-added tax rate in the petrochemical and petrochemical industries has been appropriately lowered to explore a tax system that is more appropriate to the special circumstances of the petroleum and petrochemical industries."

The basic direction of the petroleum tax reform is the linkage with international oil prices and the implementation of flexible tax rates. Officials from the Energy Development Bureau and the State Administration of Taxation of the National Development and Reform Commission have stated that although specific policies have not yet been introduced, the overall train of thought is that the tax rate will increase when the price of oil rises; the tax rate will also drop when the price of oil falls; the price of oil will drop if it falls to a certain position. Resource tax.

According to speculation by experts, the taxation of petroleum resource tax after the tax reform will generally increase, because in addition to offshore oil, the onshore petroleum resource tax is owned by local governments. It is expected that the direct result of the tax reform will be a process in which oil producers on the two continents, CNPC and Sinopec, make profits to local governments. In addition, the elastic oil resources tax will become a tool for the state to regulate oil production. From the perspective of balancing the enthusiasm of oil producers, the oil resource tax will not fully raise the oil charge standard.

All along, monopolistic companies such as petrochemicals have received excessive profits because of rising oil prices. In 2004, China Petroleum’s profits reached a record 102.9 billion yuan, and Sinopec’s profits also reached 32.275 billion yuan. The oil price reduction, the National Development and Reform Commission, said that in addition to the decline in international oil prices, the profits of domestic petrochemical companies can support this decline.

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