China Introduces Consumption Tax Exemption for Biodiesel Production

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Jan. 18 – China recently announced that pure biodiesel can be exempted from consumption tax collection. The new regulation hopes to infuse more energy to China’s underdeveloped biodiesel market.

China’s State Administration of Taxation and the Ministry of Finance co-issued the “Circular on Exempting Pure Biodiesel Oil Made from Waste Animal and Vegetable Oil from Consumption Tax Collection” on December 17. The circular announces that beginning from January 1, 2009, the government will not levy consumption tax on pure biodiesel oil that that meets the following criteria:

  • The total amount of waste animal oil and vegetable oil shall account for no less than 70 percent of the raw production materials
  • The pure biodiesel produced shall meet the national standards of the “Biodiesel Blend Stock (BD 100) for Diesel Engine Fuels”

Qualified biodiesel producers can have consumption taxes refunded if such tax items have already been collected between January 1, 2009 and December 17, 2010.

China’s biodiesel producers currently enjoy a 100 percent value-added tax refund policy. The new consumption tax exemption policy will save companies around RMB900 for each ton of biodiesel they produce.

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