Xinao Gas Holdings and Wah Sang Gas Holdings have finally moved to inform shareholders of the impact of a controversial tax policy on their earnings prospects - two months after they became aware of the issue. Xinao suspended trading in its shares yesterday, pending a statement about the financial implications of a value added tax (VAT) levy on its core gas-pipeline construction business. Wah Sang disclosed its concerns in a statement yesterday, but said it was unable to quantify the impact as it was seeking to clarify the tax issue with the local authorities. Both companies told the media on Tuesday they were aware of the levy in March. Replacing a business tax of 3 per cent payable to local governments, the State Tax Bureau imposed a 13 per cent VAT on connection fees charged by piped-gas companies to residential users. Analysts estimate the levy will hurt the profitability of gas companies, especially Xinao and Wah Sang, which rely heavily on connection fees. They say the VAT policy highlights the regulatory risks of the booming gas sector and the need for better disclosure. Disclosure concerns - Back Page
