Recently, the Ministry of Finance ("MOF") and the State Administration of Taxation ("SAT") have issued the Law of the People's Republic of China on Resource Tax (Draft for Comment) (the "Draft for Comment") for public consultation by December 20, 2017.
The Draft for Comment clearly states that the taxpayer for the resource tax purpose refers to an entity or individual that exploits mineral products or produces salt within the territory of China or in other sea waters under China's jurisdiction, and that mineral products and salt are subject to the resource tax. When it comes to the taxation methods and the tax payable, the Table of Taxable Items and Tax Rates of Resource Tax affixed to the Draft for Comment sets forth tax rates for 146 taxable items divided into four major categories, including the energy mineral resources, metallic ores, nonmetallic ores, and salt. Tax rates for only a few taxable items are adjusted appropriately, leaving those for other items still determined under the existing method and at the same rate. Furthermore, the Draft for Comment notes that tax reliefs are granted under four circumstances, such as "where the crude oil and natural gas used for heating during the process of exploiting crude oil and transporting crude oil within the oil fields are exempt from the resource tax", and it further provides that if a Chinese enterprise and a foreign enterprise work together to exploit crude oil and natural gas and pay the mining royalties, they will be subject to the resource tax according to the Law on Resource Tax in the future instead of paying the mining royalties.