Mainland piped-gas supplier Xinao Gas Holdings will decide in August whether to make a provision for its exposure to the country's new tax policy.
Executive director and deputy general manager Jin Yongsheng said yesterday the company was in talks with local authorities about details of the state tax bureau's directive, which charges a 13 per cent value-added tax (VAT) on gas firms' pipeline construction profits and replaced a 3 per cent business tax at the beginning of this year.
He said a verdict on Xinao's exposure was expected in August when its interim results were due for disclosure.
On Monday, Wah Sang Holdings became the first company to quantify its exposure to the tax liability by making a $5 million provision for the first three months of this year.
The VAT levy is seen as an attempt by Beijing to tighten regulations on the burgeoning piped-gas sector, with operators enjoying a gross profit margin of up to 90 per cent by charging end users a one-off subscription fee for gas supply, or a connection fee.
The connection fee is a major incentive for gas firms to build pipeline networks. The fee contributed 60.8 per cent of Xinao's $544.49 million turnover last year.
