China's State Council has approved a plan to amend the resource tax on crude oil and natural gas exploration to be levied based on sales value and volume, instead of the current tax applied on just volume, according to a statement issued late Wednesday by the cabinet.
The proposal was approved during a cabinet meeting chaired by Premier Wen Jiabao on Wednesday.
The statement however, did not state if the tax will be increased from the current 5% to 10% for crude oil and natural gas, or if the tax would be extended to other commodities, as it has been widely expected.
The pilot resource tax scheme was originally introduced in June 2010 in the Xinjiang Uygur autonomous region on oil and natural gas exploration, which was extended to all 12 of the western provinces and autonomous regions a month later.
China introduced the resources tax in the energy-rich Xinjiang region as part of a drive to boost revenue collection and to invest it into the area to boost stability and raise prosperity there.
Back then, the National Development and Reform Commission, the country's top economic planning agency, said that the resource tax would eventually be extended across the entire nation.
In January this year, Finance Minister Xie Xuren was quoted by the China Daily as saying that the government plans to extend the resource tax to other areas than Xinjiang in the coming five years, although no timetable has been announced.
According to figures published by the State Administration of Taxation in June, the tax revenue applied on oil and gas resource exploration between January 1, 2010 and June 30, 2010, was Yuan 371 million ($58.1 million).
After the pilot resource tax was introduced, the government collected Yuan 2.164 billion in taxes from oil and gas exploration in the second half of 2010, Yuan 1.771 billion more than the previous year.
The tax revenue to be collected from oil and gas exploration in Xinjiang this year is expected to hit Yuan 4.7 billion, which would be 85% more than last year, the ministry said.
