China tax bureau plans new consumption tax on domestic naphtha sales starting in first quarter of 2026
China plans a new tax on domestic naphtha to close revenue loopholes. This policy creates cost disadvantages for refiners and spurs precautionary importing.
洞察:
China 
CN's tax bureau notified suppliers in December 2025 that domestic sales of Naphtha would be subjected to a consumption tax of 2,105 yuan per ton and associated surcharges beginning in the first quarter of 2026. This tax, which was previously waived, is intended to plug a tax loophole and boost state revenue. The policy applies to Naphthatransactions between refineries and end-users. The specific loophole involved some producers seeking tax exemptions by claiming the product was intended for use as gasoline blendstock rather than for the production of ethylene or aromatics.
CN's tax bureau notified suppliers in December 2025 that domestic sales of Naphtha would be subjected to a consumption tax of 2,105 yuan per ton and associated surcharges beginning in the first quarter of 2026. This tax, which was previously waived, is intended to plug a tax loophole and boost state revenue. The policy applies to Naphthatransactions between refineries and end-users. The specific loophole involved some producers seeking tax exemptions by claiming the product was intended for use as gasoline blendstock rather than for the production of ethylene or aromatics.The implementation of this tax is expected to increase operational costs for domestic petrochemical producers and suppliers in China, particularly state-owned refiners who currently dominate the domestic market. Beyond the primary tax rate, domestic sellers must also pay an additional 12% social security tax surcharge that is not refundable. Furthermore, the processing period for tax rebates on domestic supply ranges from three to six months, creating a significant delay compared to the processing of imported cargoes.
