China, the world's second-largest energy consumer, will this
year begin offering corporate income tax preferences to overseas
investors in natural gas processing, marketing and construction of
urban gas pipelines in a move to use more of the clean energy
Overseas companies investing in these fields will be exempted
from the corporate income tax during their first two years of
profitability, according to China's tax laws, the State
Administration of Taxation said.
Over the following three years they will be charged half of the
When the preference ends, overseas firms investing in
construction of urban gas pipelines will pay a tax of just 15
China now levies a 17 percent corporate income tax on overseas
companies, compared with 33 percent on domestic firms.
However, according to a new corporate income tax law passed in
March, charges on both overseas and domestic companies will be 25
percent next year.
Zhang Deyong, a researcher from the institute of finance and
trade economics under the Chinese Academy of Social Sciences, said
the government expects to bring more foreign capital and advanced
technologies in the natural gas sector by providing the tax
"Natural gas is in short supply in China. The sector needs a
governmental boost badly," Zhang told China Daily.
China plans to amplify natural gas consumption as part of its
drive to cut pollution and alleviate heavy dependence on coal.
According to a government plan revealed in April, the ratio of
natural gas in the country's total energy consumption will rise to
5.3 percent a year in 2010, up from 2.8 percent in 2005.
Meanwhile, the proportion of coal will decline to 66.21 percent
from 69.1 percent.
Natural gas production in China will reach 92 billion cubic
meters a year in 2010, up from 47.9 billion cubic meters in 2005,
according to the program.
Last month, the nation's natural gas output climbed by 16.7
percent year-on-year to 5.35 billion cubic meters, according to
China is determined to cut major pollutant emissions per unit of
gross domestic product by 10 percent during the period.
(China Daily June 19, 2007)