By WAYNE MA and STEVEN YANG
BEIJING -- Foreign joint ventures involved in oil and gas production in China will now be charged a compensation fee calculated on production value rather than volume, the Ministry of Land and Resources said.
The fee will extend to unconventional oil and gas resources such as coal-bed methane gas, the ministry said Tuesday, adding that it will be retroactive from November 2011 and valid through March 2020.
The announcement is a consolidation of two long-standing policies that used different formulas to charge domestic and foreign joint ventures involved in the extraction of crude oil, natural gas and coal.
China first levied a fee on foreign joint ventures based on production volume in 1990. However, it suspended the fee in November 2011.
The government began charging domestic companies a fee based on production value in 1994. Under that formula, local governments and autonomous regions kept between 50% and 60% of the proceeds and the central government took the rest.
Going ahead, foreign joint ventures will also use the domestic formula, although with some modifications.
Local governments and autonomous regions can also apply on behalf of companies for an exemption.
The announcement follows the national rollout last year of a new resource tax, which was also calculated on value rather than volume of domestic oil and gas production.
The adjustments coincided with a decline in China's special oil income levy and merely represented a shift in tax revenue from the central government to local provinces and autonomous regions.
Dow Jones Newswires