April 13th, 2017

China’s consumption tax proposal

Implications for product tankers

Tax authorities in China may impose a consumption tax on the use of mixed aromatics and light cycle oil. The tax-exempt status of these refinery by-products has been a key reason behind the growth in their imports, which last year were 65% higher than all of China’s other clean product imports put together. If imposed, a tax could reduce China’s imports of these products and hurt product tanker demand and earnings.

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