Laws of the People's Republic of China

Ministry of Finance

Notice of the Ministry of Finance on Printing and Distributing the Measures for the Administration of the Collection of Special Petroleum Proceeds

Cai Qi [2006] No. 72

To the departments (bureaus) of public finance of all provinces, autonomous regions, municipalities directly under the Central Government and cities under separate state planning, the relevant ministries and commissions of and the relevant institutions directly under the State Council, China National Petroleum Corporation, China Petrochemical Corporation and China National Offshore Oil Corporation,

In light of the Decision of the State Council on the Collection of Special Petroleum Proceeds (Guo Fa [2006] No. 13), we hereby formulate the Measures for the Administration of the Collection of Special Petroleum Proceeds, which are hereby printed and distributed to you, please implement them accordingly.

Appendix: Measures for the Administration of the Collection of Special Petroleum Proceeds

Ministry of Finance

March 25, 2006 Appendix:Measures for the Administration of the Collection of Special Petroleum Proceeds

Article 1

These Measures are formulated in order to promote the reform of the petroleum pricing mechanism, promote the continuous, healthy and balanced development of national economy and regulate the administration of the collection of special petroleum proceeds.

Article 2

The "special petroleum proceeds" mentioned in these Measures shall refer to the proceeds on a certain proportion of the excessive returns obtained from their sales of domestic crude oil when the price thereof exceeds a certain level, which is collected by the State from the petroleum exploitation enterprises.

Article 3

All the enterprises that independently exploit and sell the crude oil within the territorial lands and waters of the People's Republic of China and other enterprises that exploit and sell crude oil in the form of equity or contractual joint venture in the above-mentioned fields (hereinafter referred to as the equity or contractual joint ventures) shall pay special petroleum proceeds according to these Measures.

Article 4

The special petroleum proceeds are non-tax incomes of the state revenue and shall be incorporated into the management of state budgetary revenues.

Article 5

The Ministry of Finance shall be responsible for the administration of the collection of special petroleum proceeds. The petroleum exploitation enterprises directly under the Central Government shall declare and pay special petroleum proceeds to the Ministry of Finance, and the local petroleum exploitation enterprises shall declare and pay special petroleum proceeds to the financial supervision commissioners' offices dispatched by the Ministry of Finance, and the special petroleum proceeds for the joint and contractual joint venture shall be withheld by the Chinese party.

Article 6

The special petroleum proceeds shall be collected at excessive progressive advalorem rates for five grades, and be calculated on a monthly basis and paid on a quarterly basis.

Article 7

The ratio for the collection of special petroleum proceeds shall be determined on the basis of the monthly weighted average price of the crude oil sold by the petroleum exploitation enterprises. For the purpose of facilitating the reference to the oil price on international market, the price of crude oil shall be calculated at the ratio of US Dollars per barrel, and the starting point shall be USD 40 per barrel.

The specific ratio of collection and the quick calculation deduction are prescribed in the following form (see the attached form for the formula of calculation): htm/e04859.htm

　　Article 8 When the special petroleum proceeds are calculated, the ratio between tonnage and barrels of crude oil shall be calculated in light of the ratio between tonnage and barrels of the oil type actually implemented or adopted by a petroleum exploitation enterprise; and the exchange rate between US Dollars and Renminbi shall be averagely calculated on the monthly basis at the middle price published every day in the current month by the People's Bank of China.

　　Article 9 Where a petroleum exploitation enterprise group has several affiliated petroleum exploitation enterprises, the special petroleum proceeds shall be collected and paid by the petroleum exploitation enterprise group.

　　Article 10 The petroleum exploitation enterprises that pay special petroleum proceeds shall faithfully fill in the forms for the declaration of special petroleum proceeds (see attached form), and after the collection, all the enterprise groups shall declare and pay the special petroleum proceeds to the organs of public finance within ten working days upon the expiration of each quarter.

　　Article 11 The organ of public finance shall carefully examine the forms for the declaration of special petroleum proceeds reported by petroleum exploitation enterprise groups and confirm the amount of special petroleum proceeds that the petroleum exploitation enterprises should pay in written form. A petroleum exploitation enterprise shall turn over them into the central treasury within five working days upon receipt of the written confirmation notification.

　　Article 12 The "common payment forms" uniformly printed under the supervision of the Ministry of Finance shall be generally used for the payment of special petroleum proceeds. All the items in the payment forms shall be completely and correctly filled in. The "Ministry of Finance" shall be filled in the column of the "organ of public finance", the "level of the Central Government" shall be filled in the column of the "budgetary grade", and the "special petroleum proceeds" of clause 7113 in the category 71 of "other incomes" shall be filled in the column of "budgetary category".

　　Article 13 In case a petroleum exploitation enterprise fails to pay special petroleum proceeds within the prescribed time limit and in full amount, the organ of public finance shall order it to pay them within the time limit, and impose a late fee at the rate of 0.05% for each day as of the date of delay.

　　Article 14 No organ of public finance may illegally reduce or exempt the special petroleum proceeds that the petroleum exploitation enterprises should pay.

　　Article 15 The special petroleum proceeds shall be incorporated into the costs and expenses of the enterprises, and the enterprise income tax thereof can be deducted before the tax payment.

　　Article 16 In case a petroleum exploitation enterprise fails to pay special petroleum proceeds according to these Measures, the organ of public finance shall punish it according to the Regulation on the Penalties and Sanctions against Illegal Fiscal Acts.

　　Article 17 These Measures shall come into force as of March 26, 2006.

　　Article 18 The power to interpret these Measures shall remain with the Ministry of Finance.

　　Attached Form: Form for the Declaration of Special Petroleum Proceeds (omitted)