The Chinese government stopped refunding 75% of value-added tax to crude importers as from Jul 1, a senior refinery source with Sinopec told C1 on Jun 27, with confirmation from its headquarters and insiders with Dalian Wepec.

“The government cancelled the VAT refund in the third quarter, because the National Development and Reform Commission recently hiked gasoil and gasoline retail benchmarks by Yuan 1,000/mt,” said the refinery source.

But the source complained the markup in distillate retail reference prices is far from enough to offset the steep refining losses at present.

The VAT reimbursement is a provisional policy implemented by the Chinese government as from Apr 1, 2008 to subsidize the refining sectors for losses ensuing from processing imported crude oil, as C1 reported earlier. A source with Sinopec revealed the oil major has obtained up to Yuan 7.1-billion from the Chinese government for April crude imports.