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Beijing’s rebate cut to hit refiners

Beijing’s scrapping of the 75% rebates on value-added taxes levied on crude-oil imports is expected to impact on the bottom lines of major oil refiners in the mainland. The National Development and Reform Commission canceled the rebate after the government approved increases to domestic fuel prices on June 20. The government had refunded part of the VAT on crude imports since April to help narrow the state oil firms’ refining losses. Goldman Sachs said axing the VAT rebates would lower Sinopec’s net profit by 62% to 27.8 billion yuan (US$4.08 billion) for this year. The move would drive Sinopec to a loss of 11.9 billion yuan (US1.75 billion) next year, compared with an earlier net profit estimate of 97.48 billion yuan (US$14.31 billion). Sinopec is the largest refiner in China. (July 7, 2008)