The resource tax is imposed on the entity and individual engaged in exploiting various taxable natural resource. The taxation scope covers 7 major categories, i.e. crude oil, natural gas, coal, other non-medal ores, ferrous ores, non-ferrous ores and salt. The resource tax is collected under the rate on value method and the amount on volume method. The resource tax rate applicable to crude oil and natural gas products is 5% to 10% of the sales volume. In terms of the resource tax, the tax amount standard for other tax items varies from RMB 0.3/ton to RMB 60/ton, depending on the kinds and locations of the resources.
Enterprises that extract taxable natural resources within the territory of China are liable to pay Resource Tax. Recently, China's State Administration of Taxation (SAT) and Ministry of Finance (MOF) announced the commencement of a comprehensive reform of the Resource Tax system to modernize and strengthen China's approach to its natural resources.
The following three new tax circulars have been released by the SAT and the MOF, setting out the purpose, principles, contents and guidelines for the Resource Tax Reform.
|Taxable items||Tax amount per unit|
|1. Crude oil||8-30 yuan per ton|
|2. Natural gas||2-15 Yuan per 1000 cubic meters|
|3. Coal||0.3-5 Yuan per ton|
|4. Other non-metal ores||0.5-20 Yuan per ton or per cubic meter|
|5. Ferrous metal ores||2-30 Yuan per ton|
|6. Non-ferrous metal ores||0.4-30 Yuan per ton|
|7. Salt |
(1) solid salt
(2) liquid salt
10-60 Yuan per ton
2-10 Yuan per ton
The amount of Resource Tax payable is based on the quantity of the taxable products by applying the applicable tax amount per unit. The formula is:
Tax payable = Quantity of taxable products × Applicable tax amount per unit
The current PRC Resource Tax Provisional Regulation and its implementation rules (together, the Regulation) are over 20 years old, formulated in 1993 and slightly amended in 2011.
The Resource Tax payable for most taxable items is calculated based on the quantity of the natural resource sold / used and the tax rates.
The tax rate ranges from a few RMB per ton to 60 RMB per ton, depending on the scarcity, grade and location of the taxable natural resource.
Tax authorities at the provincial level are generally not allowed to decide or adjust the tax rate for a natural resource, unless the central government has not specifically indicated the applicable tax rate for such a natural resource.
As early as in 2009, the China government realised that this Resource Tax system was falling behind China's economic development. In many formal occasions, the China government agreed that the Regulation has the following critical issues.
As defined by the SAT and the MOF, the purposes of the Resource Tax Reform is to increase the elasticity of the Resource Tax system, eliminate duplicate local surcharges, enhance the authority of provincial government, and gradually cover more natural resources as taxable items.
For these purposes, the Circulars set out the following new policies for implementation in the first stage of the reform:
With an aim to encourage resource saving and environment protection, the Circulars also provide some preferential treatments. For example, resources extracted by way of filling mining may enjoy a 50 percent reduction on the resource tax that is due, and resources extracted from a depleting mine may enjoy a 30 percent reduction. At the same time, provincial governments are also allowed to formulate other preferential tax treatments for extraction / utilisation of low-grade ore and wastes.