The Ministry of Finance and the State Administration of Taxation recently issued the "Circular on Adjustment of Some Product Oil Consumption Tax Policies," marking a significant update to China's excise tax framework for refined oil products. Starting from January 1 this year, China has reinstated a consumption tax of 0.2 yuan per liter on naphtha, solvent oil, and lubricants, while fuel oil is taxed at 0.1 yuan per liter.
This policy adjustment is not entirely new—it builds upon the consumption tax regulations introduced in April 2006. At that time, the Ministry of Finance and the State Administration of Taxation announced major revisions to the excise tax system, including the inclusion of naphtha, solvent oil, lubricating oil, and fuel oil under the tax scope. The original rates were set at 0.2 yuan per liter for naphtha, mineral spirits, and lubricants, and 0.1 yuan per liter for fuel oil.
However, due to rapid increases in international crude oil and refined oil prices, there were concerns that maintaining the full tax rate could disrupt market stability. To address this, the State Council approved a temporary reduction, allowing these four products to pay only 30% of the standard consumption tax. This measure was intended to ease the burden on domestic industries and prevent excessive price fluctuations.
Analysts believe that the recent circular represents a shift in policy—moving away from reduced tax rates back to full compliance with the original regulations. Despite this change, industry experts suggest that the impact on the market will be limited, as the adjustments are seen as more of a regulatory normalization than a sudden shock. The move reflects a balance between fiscal responsibility and economic stability, ensuring that the government maintains its revenue stream without causing undue pressure on the energy sector.
Safe Seal Technology Co., Ltd. , https://www.sprsealkits.com