China won't grant crude import quotas to independent refineries evading tax

China will not grant independent refineries crude import quotas if they have been found guilty of tax evasion, the National Development and Reform Commission said in an instruction posted on its website June 18.

Normally independent refineries need to submit a series of documents to apply for a new round of crude quotas.

One of the required documents will be an official certification from a local tax office stating that the refinery has not had a record of tax evasion during the period under review.

Without this, the refinery would not be granted new quotas, sources said.

"New quota grants could become much more difficult this year, as local tax offices have been working hard to curb tax evasion," a Shandong-based independent refinery source said.

Some refinery sources said poor practices would not be ended by just a warning or two and it was more likely that the government would impose severe penalties to clamp down on any tax evasion in the independent refining sector in the coming months.

So far this year, China has allocated a total of 132.19 million mt of crude import quotas to 41 independent refineries.

In January-May, combined crude imports by independent refineries came to 60.5 million mt, accounting for about 23.3% of China's total crude imports.