Circular of the State Administration of Taxation Concerning the Taxation Related to the Cooperative Exploitation of Oil Resources, Project Contracts, and Labor Services in China by Enterprises with Foreign Investment and Foreign Enterprises
Circular of the State Administration of Taxation Concerning the Taxation Related to the Cooperative Exploitation of Oil Resources, Project Contracts, and Labor Services in China by Enterprises with Foreign Investment and Foreign Enterprises
Circular of the State Administration of Taxation Concerning the Taxation Related to the Cooperative Exploitation of Oil Resources, Project Contracts, and Labor Services in China by Enterprises with Foreign Investment and Foreign Enterprises
Guo Shui Fa [1991] No. 191
November 27, 1991
In accordance with the provisions of the Income Tax Law of the People's Republic of China on Foreign-invested Enterprises and Foreign Enterprises (hereinafter referred to as the Tax Law) and the Detailed Rules for its Implementation (hereinafter referred to as the Detailed Rules), the tax issues regarding the cooperative exploitation of oil resources, project contracts, and labor services in China by enterprises with foreign investment and foreign enterprises are hereby clarified as followed.
Article 1 Depreciation of the development investments and amortization of the exploration expenses
(I) All investments, regardless of tangible or intangible assets, made during the development stage by enterprises engaging in the exploitation of oil resources must, considering the oil (or gas) field as a unit, be aggregated and treated as capital expenditures, the depreciation of which shall be computed in accordance with the provisions of the Detailed Rules. The additional development investments occurring after the commercial production in the oil (or gas) field may be aggregated on a year to year basis as the investment expenditures for the current year, the depreciation of which shall be computed from the following year. The development investments that have not fully depreciated in an out of use oil (or gas) field may be recovered from other oil (or gas) fields of the enterprises which have begun the commercial production, and the depreciation shall be recovered in accordance with the years for which the depreciation has not been computed.
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