On August 26, 2019, the Standing Committee of the 13th National People’s Congress promulgated the Resource Tax Law, which mainly stipulates a specific scope of taxpayers and taxable resources and clarifies issues such as the Table of Taxable Items and Tax Rates of Resource Taxes (the “TITR Table”):
1. The scope of taxpayers and taxable resources.
Units and individuals who develop taxable resources in the territories of the People’s Republic of China and seas under the jurisdiction of the People’s Republic of China are considered taxpayers of resource taxes. The specific scope of taxable resources shall be determined by the TITR Table, as well as the taxable items and tax rates.
2. The method of calculating and collecting resource taxes.
For taxable resources that may be subject to collection either on an ad valorem basis or on a quantitative basis as prescribed in the TITR Table, the people’s government of a province, autonomous region or municipality directly under the jurisdiction of the State Council shall propose the specific calculation and collection method, submit it to the standing committee of the people’s congress at the same level for determination, and record it with the Standing Committee of the National People’s Congress and the State Council.
If the tax is to be collected on an ad valorem basis, it shall be calculated by multiplying the sales turnover of taxable resource products at the specific applicable tax rate. If collected on a quantitative basis, it shall be calculated by multiplying the sales volume of the taxable products at the specific applicable tax rate. Mineral products that are taxable shall include raw ores and ore dressing products.
Where a taxpayer exploits or produces taxable products that fall under different taxable items, the sales amounts or sales volumes under the different taxable items shall be assessed separately. If separate assessment is not conducted or the sales amounts or sales volumes cannot be accurately provided, the higher tax rate shall apply.
3. The circumstances where resource taxes are exempt or reduced
Where taxpayers exploit or produce taxable products for their own use, such taxpayers shall pay resource taxes in accordance with the provisions of this law. However, if they are used by the taxpayers for their own use in continuously producing taxable products, there is no need to pay resource taxes.
Crude oil and natural gas used for heating in the process of extracting crude oil and transporting crude oil within the oil fields, as well as the coal (coal-bed) gas extracted by a coal mining enterprise for work safety shall be exempt from resource taxes.
Crude oil and natural gas extracted from low-abundance oil and gas fields shall enjoy a 20% reduction of the resource tax. High-sulfur natural gas, tertiary oil recovery and the crude oil and natural gas extracted from deep water oil and gas fields shall enjoy a 30% reduction of the resource tax. Mineral products extracted from depleted mines shall enjoy a 30% reduction of the resource tax.
When a taxpayer suffers heavy losses due to accidents or natural disasters in the process of exploitation or production of taxable products, as well as taxpayers who extract ores with intergrown and associated multi-elements, low-grade ores or tailings, the province, autonomous region and municipality under the direct jurisdiction of the State Council may decide to exempt or reduce resource taxes owed.
The specific measures for exempting or reducing the resource taxes shall be proposed by the people’s government of a province, autonomous region or municipality under the direct jurisdiction of the State Council for submission to the standing committee of the people congress at the same level for determination and to the Standing Committee of the National People’s Congress and the State Council for recordation.
4. The administrative measures for the filing of resource taxes.
The administration and collection of resource taxes are handled by tax agencies in accordance with this law and the Tax Collection Administration Law of the People’s Republic of China. A taxpayer is required to file and pay resource taxes to the tax agency for the place the taxable products are exploited or produced. The resource taxes shall be filed and paid on a monthly or quarterly basis. If such taxes cannot be calculated and paid in fixed periods, they may be filed and paid when they are incurred instead. If a taxpayer files and pays the tax by month or by quarter, the tax shall be filed and paid to the tax agency within 15 days after the end of the month or quarter. If the taxes are filed and paid when they are incurred, the taxes shall be filed and paid to the tax agency within 15 days after the occurrence of the tax payment obligation.
5. The circumstances for collecting water resource taxes and for the payment of resource taxes by enterprises that exploit onshore or offshore oil resources
Water resource taxes are levied on units and individuals who extract surface water or groundwater. If a water resource tax is levied, no water resource fee will be assessed. The water resource tax is subject to differential tax rates based on the status of the local water resources, how the water is being extracted and the local economic development. The pilot implementation measures for water resource taxes shall be prescribed by the State Council and recorded with the Standing Committee of the National People’s Congress. Within five years after the effective date of this Law, the State Council shall report to the Standing Committee of the National People’s Congress on the state of the water resource tax collection pilot program and make timely recommendations on how the law shall be amended. If a contract on Sino-foreign cooperative exploitation of land and offshore oil resources was executed before November 1, 2011, the mining royalties shall be paid continuously pursuant to relevant state requirements with no need to pay the resource taxes until the contract expires, after which the resource taxes incurred therefrom shall be paid.