I. Background and Purpose of Drafting

　　Since the implementation of the reform to base resource tax assessments on value, the State Administration of Taxation has successively issued several administrative documents, including the Measures for the Administration of Coal Resource Tax and the Announcement on Implementing Preferential Policies for Resource Tax. Judging from the implementation status in various regions, tax collection and administration have been running smoothly, the tax compliance order has been good, and the reform’s intended objectives have been largely achieved. However, some tax authorities and taxpayers have also reported that there are certain collection and administration issues in practice that urgently need to be standardized and clarified. To further standardize the collection and administration of resource tax, optimize taxpayer services, and prevent tax-related risks, the State Administration of Taxation has researched and formulated the “Procedures for the Collection and Administration of Resource Tax” (hereinafter referred to as the “Procedures”).

　　The “Regulations” primarily adhere to the following principles:

　　First, we will consolidate the achievements of the reform to shift the resource tax assessment from a quantity-based to a value-based system. By reviewing relevant administrative documents issued since the implementation of the value-based resource tax assessment reform and summarizing best practices from various regions, we will distill those approaches that have proven mature and effective in practice into the “Procedures,” thereby further solidifying the reform’s gains and amplifying its impact.

　　Second, we will thoroughly implement the State Council’s requirements for deepening the “delegation, regulation, and service” reform and optimize tax services. The “Regulations” explicitly include measures such as standardizing the management of resource tax sources, improving the filing procedures for resource tax incentives, appropriately simplifying the resource tax payment periods, and strengthening source-based control over resource taxes—all aimed at further optimizing tax services and reducing the administrative burden on taxpayers.

　　Third, we must strengthen our awareness of bottom-line requirements and proactively guard against risks associated with the payment and collection of resource taxes. Following the full-scale implementation of the reform to calculate resource taxes based on their value, new demands have been placed on resource tax risk management. To address this, the “Procedures,” drawing on lessons learned from various regions, clearly outlines requirements for preventing and mitigating resource tax risks through channels such as declaration review and inter-departmental collaboration, thereby jointly safeguarding against tax-related risks.

　　II. Main Contents of the “Regulations”

　　The “Regulations” consist of 26 articles, clearly defining the scope of deemed sales, the conditions for deducting transportation costs, the principle of withholding and remitting taxes on behalf of others, the methods for determining the taxable price of taxable products, as well as matters related to standardized declarations, inter-departmental cooperation, information sharing, and risk management. The main contents are as follows:

　　(1) Clarified the method for determining the tax-inclusive price of self-mined and self-used raw ore or concentrate.

　　In actual tax administration practice, when a taxpayer extracts raw ore and uses it directly for processing (or smelting) non-taxable products, it is often difficult to determine the taxable price of the raw ore or concentrate used for self-consumption. To address this issue, in addition to the method stipulated in Article 7 of the "Interim Implementation Rules of the Resource Tax of the People's Republic of China," the "Procedures" have introduced a new pricing method based on value composition: Specifically, the taxable price is determined by subtracting the costs and profits incurred during subsequent processing stages from the sales price of the non-taxable products obtained after such processing. This method has already proven effective in some regions, and local authorities have deemed it necessary to incorporate it into the "Procedures." At the same time, the "Procedures" have added a catch-all provision allowing for determination by "other reasonable methods."

　　(2) Clarified the scope and supporting documents for deducting transportation and handling charges as well as purchased minerals.

　　After the implementation of the reform to base resource tax calculations on value, the taxable objects of the resource tax now include both raw ore and refined ore. The tax base has been adjusted to the sales revenue of refined ore or raw ore products. Normally, sales revenue is accounted for separately from transportation and handling costs, as well as from revenues derived from self-mined versus purchased ores. However, in practice, the situation is more complex, with a variety of settlement methods employed. Some taxpayers include transportation and handling costs in their sales revenue, while others mix purchased ores with self-mined ores before selling them. To ensure a fair tax burden, avoid double taxation, and bring the tax base back to the intrinsic value of the resources themselves, the "Regulations" stipulate that transportation and handling expenses or the purchase amounts of externally sourced ores included in sales revenue shall be deducted.

　　Article 7 of the Regulations clearly specifies the conditions under which transportation and miscellaneous expenses are deducted when calculating the resource tax. At the same time, it emphasizes that if the deducted transportation and miscellaneous expenses are significantly higher than reasonable levels without justifiable reasons, the competent tax authority may reasonably adjust the taxable price.

　　Article 9 of the Regulations clarifies the tax calculation method for mixed sales and mixed washing (processing) of self-mined ores and purchased ores. Article 10 of the Regulations specifies that the supporting documents eligible for deduction include value-added tax invoices for purchased taxed products, special payment receipts for import value-added tax issued by customs, or other lawful and valid documents.

　　(3) Standardized the implementation methods for resource tax reduction and exemption policies.

　　From June 2010 to July 2016, tax reforms were successively implemented for taxable products such as crude oil, coal, rare earths, and iron ore, shifting from quantity-based resource taxes to value-based resource taxes. Since each reform targeted different mineral resource items and featured varying exemption and reduction policies as well as distinct implementation approaches, the “Regulations” clearly stipulate that oil and gas field enterprises may directly use their tax return forms and supporting schedules—as filed—to serve as documentation for resource tax exemption and reduction filings; other taxpayers shall file their resource tax exemption and reduction documentation in accordance with applicable regulations.

　　To implement the spirit and requirements of the State Council’s deepening reform of “delegation, regulation, and service,” the “Regulations” explicitly stipulate that, by the end of October 2018, the submission of resource tax preferential documentation from taxpayers to tax authorities will be replaced by keeping such documentation on file for taxpayers’ own reference, thereby further reducing the burden on taxpayers in terms of document submission.

　　(4) Standardized the withholding and remittance of resource taxes.

　　After the comprehensive rollout of the business tax-to-value-added tax (VAT) reform, a VAT invoice-based chain has been fully established across the mining, extraction, and circulation stages, creating favorable conditions for leveraging VAT invoices to effectively manage scattered sources of resource tax. Based on pilot experiences in several cities and counties in Shanxi, Chongqing, and Shandong, where VAT invoices have been used to control scattered resource tax sources, it has become possible to implement source-based taxation at the mining sites themselves, and the proportion of resource taxes voluntarily declared and paid by taxpayers has been steadily increasing. To this end, the "Regulations" explicitly stipulate: "For taxpayers already included in normal tax administration at the mining site or who issue VAT invoices when selling mineral products, the withholding and collection method will no longer be applied." At the same time, to standardize the withholding and collection process, the "Regulations" further clarify that "the scope of application for resource tax withholding and collection shall be limited to mineral products—other than crude oil, natural gas, and coal—that feature small, scattered, and irregular mining operations, making it difficult to declare and pay resource taxes at the mining site itself."

　　(5) Improved departmental collaboration and risk prevention measures.

　　The mining administration departments and industry associations possess extensive tax-related information, such as details on the transfer and assignment of mining rights, production and sales volumes of mineral products, and mineral prices. This third-party information is instrumental in controlling resource taxes at the source and in managing associated risks. Therefore, the “Regulations” emphasize that tax authorities should proactively communicate and collaborate with relevant departments, including mining administration departments and industry associations, to achieve information sharing and strengthen the management of resource taxes before, during, and after the event.