Circular of the Ministry of Finance and the State Administration of Taxation on Financial and Taxation Handling of Waste Discharge Expenses Incurred in Sino-foreign Cooperative Offshore Oil (Gas) Fields

Circular of the Ministry of Finance and the State Administration of Taxation on Financial and Taxation Handling of Waste Discharge Expenses Incurred in Sino-foreign Cooperative Offshore Oil (Gas) Fields

Cai Shui Zi [2000] No. 21

February 18, 2000

The offices of the State Administration of Taxation in Tianjin, Shanghai, Guangdong province (municipalities directly under the Central Government), the finance department (bureau) and the office of the State Administration of Taxation of Shenzhen city, and the China National Offshore Oil Corp.,

For the purposes of attracting foreign investment, supporting the production in Sino-foreign cooperative exploitation of offshore oil (gas) fields, and encouraging reasonable employment of resources and facilitating offshore environment protection, following deliberation, issues concerning the financial and taxation handling of waste discharge expenses incurred in offshore oil (gas) fields are hereby set out as follows:

Upon completion of the production in Sino-foreign cooperative oil (gas) fields, net expenses (upon deduction of the income derived from the increased prices of wastes) actually incurred by Sino-foreign oil companies, following verification and confirmation by the competent tax authority, for the same Chinese and foreign cooperating parties, where the company has subsequent income from oil (gas) fields, shall be amortized in five to ten years or be amortized in the actual term of income in the event the term of income from subsequent oil (gas) is less than five years; where the company has no subsequent income from oil (gas) fields, the said expenses may be deducted from the taxable income and taxes thereon if paid shall be refunded within three (3) years before such waste discharge expenses of oil (gas) field are incurred.


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