Posts Tagged ‘LNG’

China can hurt America in trade war six ways from Sunday

June 21, 2018
The threat of a full-scale trade war between the US and China has dominated the news in recent weeks. The countries have exchanged import tariffs on each other’s goods, and are threatening further protective steps.

After numerous threats to tax Chinese imports, US President Donald Trump fired the first shot by approving $50 billion in tariffs that will come into force on July 6. Beijing immediately responded by imposing a 25-percent tariff on American imports worth $34 billion, which will come into effect on the same day.

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Russia Today (RT)

Trump issued a threat to impose additional 10-percent levies on $200 billion of Chinese goods coming to the US. This prompted a pledge from China’s Commerce Ministry to “forcefully fight back” with “qualitative” and “quantitative” measures.

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China’s Commerce Ministry

The mutual exchange came two months after the White House slapped China and several other nations, including Russia and India, with an import tax of 25 percent on steel and 10 percent on aluminum. In late May, the measure was extended to the EU, Canada and Mexico.

Now that everyone’s cards are on the table, the question is what else China can do to protect itself and minimize damages in this fierce fight between the world’s two largest economies. Let’s explore the possibilities.

Cutting US investments

Chinese corporations have significantly decreased their investments in the US amid the mounting spat, reports Rhodium Group, a research provider that tracks Chinese foreign investment. The reported plunge totaled 92 percent within the first five months of this year.

China became America’s strategic partner at the end of the last century as part of a US plan to undermine the Soviet Union. This had involved enormous efforts by Washington dating back to the Nixon administration.

RT

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US friendly suggestion to China: Buy more American gas if you don’t want more tariffs https://on.rt.com/91qa 

US friendly suggestion to China: Buy more American gas if you don’t want more tariffs — RT Business…

Donald Trump’s economic adviser has a suggestion as to how China can avoid more tariffs on its goods – buy more liquefied natural gas (LNG) from America.

rt.com

In the early 2000s, however, the George W. Bush administration turned Beijing from a strategic partner into a strategic rival. Chinese companies invested heavily in the US, but Washington’s tougher stance on imports and with US regulators derailing major deals, Chinese investments have been drying up.

Further tariffs on US imports

Beijing could escalate tariff hikes on more American products. While analysts agree that no one would emerge as a winner from the conflict, Beijing says it’s willing to take pain in order to protect its interests. If the trade war escalates, major American corporations would be damaged. China is already targeting American products from states that backed Donald Trump during his presidential campaign. So far, Beijing has taxed American fruit, nuts, pork, wine, soybeans, corn, wheat, rice, sorghum, beef, poultry, fish, dairy products, alfalfa, and vegetables. But Apple and Boeing could be the next targets.

RT

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China can substitute US oil with Iranian crude to ‘infuriate Trump’ – analyst https://on.rt.com/97wa 

China can substitute US oil with Iranian crude to ‘infuriate Trump’ – analyst — RT Business News

Beijing’s retaliatory measures against US tariffs can include penalties on oil coming to China from America. A cut in Chinese purchases of US oil may benefit Iran’s sales and anger Washington.

rt.com

Rejecting US oil and gas

China, the world’s biggest energy consumer, has become one of the key purchasers of US oil since Washington allowed its producers to sell crude abroad after a 40-year ban. At the same time, China is set to become the world’s largest buyer of liquefied natural gas (LNG) in the next decade. Beijing has pledged to announce additional duties on the remaining $16 billion of US goods, including crude oil, LPG, gasoline, naphtha, fuel oil and natural gas.

READ MORE: Yuan going global as China boasts largest foreign reserves & infrastructure megaprojects

China has been the largest Asian buyer of US crude, with its market share rising to 3.5 percent in the first quarter from 0.4 percent over the same period a year ago, according to S&P Global Platts. China accounted for 23 percent of total US crude exports in March, data from the Energy Information Administration reveals. “LPG is expected to face the second biggest impact” Platts said in an emailed report, citing US supplies that accounted for 22.4 percent of China’s total propane imports in the first quarter.

Although LNG is not on the list yet, Beijing might introduce additional tariffs on some of its energy imports from the US, and decrease purchases or completely stop buying oil and gas from the US altogether.

Yuan devaluation

A weaker national currency would help China to boost trade competitiveness. Beijing might relax capital control measures, which have helped the country’s authorities to strengthen the renminbi over the past two years. The step would help the country’s exports.

RT

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Trade wars lead to real wars where the strong prey on the weak – economists to RT https://on.rt.com/92qs 

“One would imagine that China will be thinking about currency devaluation again. The yuan doesn’t trade freely, and analysts are often left wondering what the People’s Bank of China has in mind for the currency,” said Rabobank’s senior Asia-Pacific strategist Michael Every, as quoted by Market Watch. “Devaluation is one of Beijing’s most powerful economic tools.”

Dumping treasuries

As a tit-for-tat response, the Chinese government might use the ‘nuclear option’ and take aim at the largest American import – government debt. China held some $1.18 trillion of US treasuries as of the end of April, making it the largest of America’s foreign creditors and the second overall owner of US government bonds after the Federal Reserve. Dumping those holdings could drive bond yields higher and make it more costly to finance the federal government. The step would have a major negative impact on US finances and global investors.

For more stories on economy & finance visit RT’s business section

https://www.rt.com/business/430343-ways-china-retaliate-us/

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US prepares for next wave of LNG exports

June 21, 2018

Chinese demand is soaring — so much so that Beijing spared the product from tariff rises

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© FT montage / Bloomberg

By Ed Crooks in New York

When China last week set out a list of US exports threatened with retaliatory tariffs, almost all fossil fuels were covered, including oil, coal and liquefied petroleum gases such as propane. There was, however, one conspicuous exemption: liquefied natural gas.

Beijing’s decision not to impose additional tariffs on US LNG shows the critical role that the fuel plays in the Chinese government’s plans as it attempts to curb the country’s reliance on coal. China’s demand for LNG is soaring, and its imports of gas from the US have been rising fast: from nothing in 2015 to 17bn cubic feet in 2016 to 103bn cubic feet last year. By deciding not to restrict imports of US LNG, China has let its energy policy override its trade policy, for the time being at least.

That is an encouraging sign for the companies including Venture Global LNG, Qatar Petroleum, LNG Ltd and Tellurian that are hoping to be part of a second wave of investment in US LNG export plants. For any would-be seller of LNG looking for buyers, China is the big prize.

Already last year China was the third-largest destination for US LNG exports, behind Mexico and South Korea. Its demand for gas is expected to continue to grow rapidly, accounting more than a quarter of all global consumption growth between 2015 and 2040 according to the US Energy Information Administration.

Rapid demand growth in China and other emerging economies meant 2018 was shaping up to be an exciting year for aspiring US LNG exporters. After three years without a single new plant being given the go-ahead, several companies say they are approaching final investment decisions to build their planned facilities. But the escalating trade dispute between the US and China casts a shadow over those plans.

A first wave of US LNG plants has been under construction along the Gulf of Mexico coast. The earliest, Cheniere Energy’s Sabine Pass in Louisiana, shipped its first cargo in 2016, and the last is expected to be completed in 2020. An expected second wave, however, has been on hold.

There has not been an approval for a new US LNG plant since 2015, because of what seemed to be a looming glut in the market. Then last month Cheniere announced it was going ahead with an expansion at its Corpus Christi plant in Texas. It was a signal that the logjam holding up new investment is starting to break.

Baker Hughes, General Electric’s affiliate that provides products and services for the oil and gas industry, is supplying equipment for the expansion at Corpus Christi, and hoping for more orders. Pablo Avogadri, the company’s LNG platform leader, said it was “excited about the new market conditions”.

A new LNG plant takes about four years to build, so investment decisions now are based on expectations of conditions after 2022, but there seemed to be so much new production coming on to the market, from Australia and the first wave of US plants, that it looked as though there could be an oversupply into the next decade.

Those expectations of excess supply have been eroded, however, because demand for LNG has also been soaring. China increased its imports by 46 per cent last year, overtaking South Korea to become the world’s second-largest LNG buyer.

Demand is also growing more widely. The number of importing countries has risen from 35 in 2015 to 40 last year, according to the International Group of Liquefied Natural Gas Importers, and worldwide imports rose 18 per cent over the same two-year period.

“There hasn’t quite been as big a surplus of gas as everyone thought there was going to be,” said Frank Harris, an analyst at Wood Mackenzie. “There is some real momentum now behind the next wave of export projects.”

Other countries, including Russia, Qatar and Mozambique, are also offering increased LNG production in the future, but the US is a highly competitive supplier because of the abundance of low-cost gas unlocked by the shale revolution.

Brian Gilvary, BP’s chief financial officer, told a Financial Times conference last week that the company expected US gas to continue to be “the lowest cost of supply . . . in the world”.

Until now, the problem for companies hoping to launch second wave US LNG export projects has been that they could not satisfy both their customers and their financiers simultaneously. To have confidence to provide project financing for a multibillion-dollar plant, lenders have wanted to see 20-year contracts that guarantee revenues. But seeing the expected glut, customers were reluctant to tie themselves down with such long-term commitments. Now attitudes are shifting.

In February Cheniere signed a contract with China National Petroleum Corporation to sell 1.2m tonnes per year until 2043. Venture Global LNG, a privately held company that aims to develop two new LNG plants in Louisiana, in May signed long-term contracts with BP and Galp of Portugal, to add to existing contracts with Royal Dutch Shell and Edison of Italy.

Venture Global is using an innovative technology for its proposed plants: rather than constructing the LNG production facilities on site, it is using large modules made by Baker Hughes in northern Italy, which need much less assembly on location.

“The execution risk is much smaller than for any other project,” Michael Sabel, one of Venture’s co-chief executives, said. He added that he was “very confident” about being able to go ahead with the company’s first project to export 10m tonnes per year from Calcasieu Pass, Louisiana, with the first shipments starting in 2022.

“It’s no longer about guessing which projects and when they are going to go ahead,” he said. “Ultimately the customer decides, and that’s what they have done.”

Other companies with US projects also say they are making good progress. LNG Ltd, which is developing the Magnolia LNG plant, also in Louisiana, is aiming to make an investment decision by early next year.

Tellurian, where former Cheniere chief executive Charif Souki is chairman, has a different business model but is also making headway. It is looking for equity investors in its plant, who would also be customers for the LNG, and has about 25 companies working through its data room. Meg Gentle, chief executive, said that by the end of the process, Tellurian expected to have “four to eight” investors.

Golden Pass LNG in Texas, a joint venture between Qatar Petroleum and ExxonMobil, is also expected to be given a final investment decision this year.

The biggest threat to all these plans, however, is the trade dispute between the US and China. Even if US LNG exports have been spared for now, the prospect of being shut out of the world’s biggest growth market will hang over the industry until the hostilities are brought to an end.

Jason Bordoff of Columbia University’s Center on Global Energy Policy said: “If you’re thinking about investing in new US LNG export capacity, and you see the potential for an escalating trade conflict to possibly lead to tariffs on US LNG in China, you might think twice and consider investing elsewhere instead.”

An increasingly significant factor for US LNG exporters is the shift in the global market away from long-term contracts towards flexible short-term sales. Last year 27 per cent of LNG worldwide was sold on a spot basis or on a contract of four years or less, up from 19 per cent in 2010, according to the International Group of Liquefied Natural Gas Importers.

As the market becomes more liquid, buyers such as utilities become more confident that they will be able to secure gas when they need it, and sellers become more confident that they will be able to find a market.

BP for example, is aiming to increase its portfolio of LNG from 15m tonnes per year today to about 25m tonnes per year, from its own plants or by buying from other producers.

This year BP and Royal Dutch Shell have signed contracts with Venture Global LNG to buy gas from its proposed plant in Louisiana, to add to the portfolios of gas that they can sell around the world. They are making a bet that when the gas is available they will be able to find a profitable market for it somewhere.

“It is no coincidence that it is four European companies that have signed up to buy gas from Venture Global,” Ira Joseph of S&P Global Platts said.

“They have the ability to sell into European markets, or to divert it elsewhere.”

https://www.ft.com/content/20463408-7094-11e8-92d3-6c13e5c92914

See also:

Global Oil & Gas: The End Of The Status Quo’ In LNG Markets

Source:https://mozambiqueminingpost.com/2018/03/29/global-oil-gas-the-end-of-the-status-quo-in-lng-markets/

America’s Miners, Farmers, Crude Exporters Liklely To Benefit From Latest China Trade Offer to U.S.

June 6, 2018
Xi offers to buy additional $25 billion U.S. goods this year — Crude oil, coal and farm products among products to see boost

American crude drillers, coal miners and farmers are set to be among the beneficiaries of the Trump Administration’s trade pressure on China.

Image result for U.S. Coal Miners, photos, 2018
Coal miners

China has offered to boost purchases of American goods by about $25 billion this year, showing particular willingness to step up imports of crude oil, coal and farm products, according to people briefed on trade talks between the two countries. The Chinese offer comes days after U.S. Commerce Secretary Wilbur Ross visited Beijing for talks over how to reduce China’s goods-trade surplus and diffuse an escalating trade war.

The offer underscores how commodities have shifted from being seen as a potential casualty of the trade conflict to a possible beneficiary of Beijing’s pledge to import more American goods. U.S. exports to China last year totaled $130 billion while Chinese imports to the U.S. totaled $506 billion. That left a U.S. deficit of more than $375 billion.

Here is a closer look at the commodities that may be affected by trade talks:

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Crude

China is already helping drive a surge in U.S. crude exports, increasing purchases last year to 224,000 barrels a day, up from just 1,000 in 2015, when Washington lifted restrictions on exports.

For China, the biggest importer of oil in the world, U.S. crude is just a small part of its portfolio, with major suppliers like Saudi Arabia and Russia having the biggest shares. China spent $162.3 billion on crude purchases in 2017, with just $3.16 billion of that going to the U.S.

Sinopec, the Chinese state-owned firm that’s the world’s largest refiner, has already begun boosting U.S. purchases. Its trading arm charted three of the largest class of oil tankers to load U.S. crude in May and as many as seven in June, according to people familiar with the deals.

Coal

China is the largest consumer and producer of coal in the world, and if it’s serious about importing more of America’s coal, Appalachia is the region to watch. U.S. Census data shows the vast majority of U.S. coal exports to China went through Norfolk, Virginia, and Baltimore last year.

China was already said to be considering a plan to buy more American coal, specifically from West Virginia. Murray Energy Corp., Arch Coal Inc., Contura Energy Inc., Blackhawk Mining LLC and Ramaco Resources Inc. all stand to gain from increased Chinese purchases from the state, according to Clarksons Platou Securities analyst Jeremy Sussman. Murray Energy’s chief executive officer, Bob Murray, happens to be an outspoken advocate of Trump, his administration and all it has done to bolster coal’s prospects in America.

China’s coal purchases from the U.S could triple in value this year to about $1.3 billion, according to Michelle Leung, an analyst at Bloomberg Intelligence.

soybeans

Soybeans

The oilseed has been one of the major battlegrounds of the trade war and will very likely feature in any truce. China’s planned tariffs on U.S. exports were seen as a politically charged strike at America’s agricultural heartlands, which had supported Trump’s presidency.

China is the world’s top soybean importer and America’s largest buyer in trade worth $14 billion last year. While about a third of U.S. production goes to the Asian country annually, China last year bought more of the oilseed from Brazil.

China could potentially increase annual U.S. soy imports to more than 40 million to 50 millions metric tons, Shanghai JC Intelligence Co. said last month. It purchased almost 33 million tons from the U.S. last year and 50.9 million from Brazil. Buyers had been shunning American supplies due to uncertainty over whether the government would follow through on its planned tariffs.

Cotton

Cotton represents another major trade flow from the U.S.: exports of raw cotton fetched $5.8 billion last year, government data show. China was the top destination after Vietnam. Chinese futures have eased from a four-year high last week after the country’s cotton association said the government will issue more import quotas to meet demand. It didn’t specify the volume to be issued on top of the annual low-tariff-rate quota of 894,000 tons.

Other U.S. agricultural products that could benefit from increased Chinese imports include sorghum and distillers dried grains, according to Shanghai JC Intelligence Co. Beijing last month scrapped an anti-dumping and anti-subsidy probe into purchases of American sorghum, a trade worth almost $1 billion in 2017.

Ethanol

China could also increase its ethanol imports as the government expands its use in vehicles nationwide by 2020, according to Shanghai JC Intelligence. Purchases surged in the first quarter as buyers sought to secure supply ahead of extra tariffs and as expensive domestic corn made imports attractive.

The U.S. accounted for about 86 percent of China’s ethanol imports in the first three months of this year, according to customs data.

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LNG

Liquefied natural gas is another sector where China and the U.S. can find common ground. The Asian nation is set to become the world’s largest LNG importer in the next decade, and several proposed U.S. export projects are seeking long-term buyers to finance construction. Bloomberg New Energy Finance forecasts China’s imports growing to 82 million tons a year by 2030, but the country has long term contracts to supply just 42.5 million tons by then, leaving plenty of space for new purchases.

If China were to fill every drop of uncontracted LNG with U.S. gas, that would amount to about $20 billion a year in purchases by 2030. There are already signs of growing cooperation between the two countries. Earlier this year, China National Petroleum Corp. signed a 25-year deal with Cheniere Energy Inc. to buy U.S. gas. China Petrochemical Corp. has signed a joint development agreement with a proposed export plant in Alaska, and China Gas Holdings Ltd. has agreed to purchase 3 million tons of LNG a year from Delfin LNG’s proposed plant in the Gulf of Mexico.

LPG

There’s a lot of room left for China to increase imports of liquefied petroleum gas, fuel that’s used mainly for cooking, heating and transportation. The Asian nation last year bought 3.56 million tons, or about 113,000 barrels a day, from the U.S., worth $1.86 billion, customs data show. Only the U.A.E. supplied more, sending 6.49 million tons worth $3.19 billion.

Still, China’s imports from the U.S. were far lower than total estimated American LPG exports of about 1 million barrels a day in 2017. With shale output still booming and economic growth in the Asian nation showing little sign of slowing down, trade in products such as propane and butane can potentially be boosted. If that happens, other suppliers such as Saudi Arabia and Qatar may lose out on the prized Chinese market.

— With assistance by Dan Murtaugh, and Stephen Stapczynski

https://www.bloomberg.com/news/articles/2018-06-06/america-s-wells-mines-and-farms-targeted-by-china-trade-offer

China lowers tariffs, rejects US trade war escalation — Afraid of Trump?

May 31, 2018

China said Thursday it wanted to avoid an escalation of trade tensions with the United States, as the two sides held new talks and Beijing decided to lower some tariffs.

The overture came two days after the White House said its planned trade sanctions against China were still in the works despite the announcement of a truce following a previous round of talks earlier in May.

China has threatened to hit back with tit-for-tat tariffs on tens of billions of dollars in US goods.

© AFP/File | China has said it wants to avoid an escalation of trade tensions with the United States

A 50-strong US delegation arrived in Beijing on Wednesday for follow-up meetings, Chinese commerce ministry spokesman Gao Feng said, without proving more details.

“We hope that China and US economic and trade cooperation can benefit people in both countries, and we are not willing to see trade frictions escalate,” Gao told a regular press briefing.

The delegation is laying the groundwork for a weekend visit by US Commerce Secretary Wilbur Ross.

The Trump administration said Tuesday that US sanctions announced in March — including restrictions on Chinese investment, export controls and 25 percent tariffs on as much as $50 billion in Chinese tech exports — remain under development.

Gao slammed the proposal, saying US measures to implement investment restrictions and export controls against China “do not conform with the basic principles and spirits of the WTO (World Trade Organization)”.

“China will carefully evaluate the US measures and relevant impact and retain its rights to adopt relative measures.”

Separately, the Chinese government announced in a statement late Wednesday that it would further cut import tariffs on daily consumer goods from July 1.

The average tariff on clothing, shoes and hats, kitchenware, and sports and fitness supplies will be reduced from 15.9 percent to 7.1 percent.

The rate for home appliances such as washing machines and refrigerators will be lowered from 20.5 percent to eight percent.

– ‘No forced tech transfers’ –

Gao said China will also publish a “negative list” of foreign investment by June 30 to ease restrictions in fields including energy, resources, infrastructure and transportation. A negative list includes all the industries with foreign investment restrictions.

Beijing previously said it would relax restrictions on foreign investment in automobiles, shipbuilding and aircraft firms.

At a meeting Wednesday chaired by Premier Li Keqiang, the State Council — or cabinet — also decided that China would widen market access through more foreign investor-friendly measures, according to the official Xinhua news agency.

“We should raise our innovation capacity in the new round of opening up and see that all intellectual property be fully protected,” Li said.

“No forced technology transfer will ever be imposed on foreign-invested enterprises and IPR (intellectual property rights) infringements will be penalised to the full extent of the law.”

Donald Trump has accused China of forcing US firms to hand over their industrial secrets to Chinese firms in order to do business in the country, a charge that Beijing has rejected.

In other measures announced by Xinhua, overseas traders will be encouraged to participate in crude oil and iron ore futures trading.

Severe measures will be taken to punish infringements, counterfeiting, commercial secret violators and trademark squatters.

AFP

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China Cuts Tariffs on Wide Range of Consumer Goods From July

 Updated on 

China will reduce tariffs on a wide range of consumer goods from July 1, the State Council said in a statement.

The tariff cuts will apply to products including clothes, washing machines and makeup. The reduction was decided at the state council on Wednesday which was chaired by Premier Li Keqiang.

The announcement came after President Donald Trump decided to move ahead with additional tariffs on $50 billion of imports from China, a move that could potentially derail the truce reached last week between the world’s two biggest economies. China hit back at that, with a foreign ministry spokeswoman saying on Wednesday that China would respond accordingly if the U.S. insisted on unilateral measures.

Read the rest:

https://www.bloomberg.com/news/articles/2018-05-30/china-cuts-tariffs-on-wide-range-of-consumer-goods-from-july-1

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Trump urges staff to portray him as “crazy guy”

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Petronas Nears Deal to Invest in $31 Billion Canada Project

May 31, 2018

Malaysia’s Petroliam Nasional Bhd. is nearing a deal to invest in a proposed C$40 billion ($31 billion) liquefied natural gas project in Canada led by Royal Dutch Shell Plc, according to people with knowledge of negotiations.

An announcement may come as soon as Thursday, said one of the people, who asked not to be identified because the talks are private. The LNG Canada project, in northern British Columbia, is led by Shell and partners Mitsubishi Corp., PetroChina Co. and Korea Gas Corp.

Image result for Petronas towers, photos

LNG Canada executives weren’t immediately available for comment. Representatives for Petronas and Shell didn’t immediately respond to requests for comment.

A deal would mark a turnaround by Petronas after it abandoned its own $27 billion LNG proposal in the western Canadian province last July after the project faced spiraling costs and staunch opposition from environmental and indigenous groups. That decision left it without a plan to ship gas produced by its Progress Energy Canada unit to Asia as originally intended.

Image result for LNG ships, photos

Buying into the Shell-led project would help revive that prospect. LNG Canada plans to build an export facility at Kitimat near Prince Rupert — North America’s closest port to Asia — that could eventually reach 26 million tons a year in capacity.

Petronas’s involvement would also help bring financing and gas supplies to LNG Canada as the group nears a final investment decision, expected this year. Petronas’s Progress unit could contribute an additional 560 million cubic feet a day of production to the project, meaning it would have all the gas it needs to meet its initial export target, according to National Bank of Canada analyst Greg Colman.

Shell and its partners have twice delayed a final investment decision on the project amid a global supply glut. But in recent months, Shell has indicated the window for competitive projects may be reopening, saying that global LNG demand exceeded expectations last year and that the market may again face a supply shortage by the mid-2020s.

“It is looking very, very positive for this project,” Karl Johannson, head of Canada and Mexico natural gas pipelines for TransCanada Corp., which is set to build the pipeline to deliver gas to the export facility, said on an investor call in April.

— With assistance by Kevin Orland, Michael Bellusci, and Aaron Clark

Bloomberg

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https://www.bloomberg.com/news/articles/2018-05-31/petronas-said-near-investment-in-31-billion-lng-canada-project

China vows to ‘fight back’ if US imposes tariffs — “Washington continues to act in an arbitrary and reckless manner.”

May 30, 2018

China on Wednesday warned Washington that it would take “resolute and forceful” measures if the Trump administration follows through with its threat to impose tariffs on Chinese goods – sparking the possibility of a trade war in the days before a visit by Commerce Secretary Wilbur Ross, according to a report.

“We do not want a trade war, but we are not afraid of one. We will fight back,” Chinese Foreign Ministry spokeswoman Hua Chunying said, according to the Associated Press.

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Chinese Foreign Ministry spokeswoman Hua Chunying

Beijing was responding to the White House announcement that it was planning on moving forward with imposing a 25 percent tariff on $50 billion worth of Chinese goods after the two countries agreed earlier this month to continue trade negotiations.

“We urge the United States to keep its promise, and meet China halfway in the spirit of the joint statement,” Hua said, adding that Beijing would take “resolute and forceful” measures to protect its interests if Washington continues to act in an “arbitrary and reckless manner.”

“When it comes to international relations, every time a country does an about face and contradicts itself, it’s another blow to, and a squandering of, its reputation,”​ she said.

The escalating trade tensions could add a wrinkle to the talks Ross will have with Chinese officials during his visit this weekend when he tries to convince them to buy more US goods.

​The Trump administration said it was taking the action in the face of China’s unfair trade practices in an effort to lower the US’ $375 billion trade deficit with the country.

Earlier this month, members of the Trump administration – including Treasury Secretary Steve Mnuchin and Trade Representative Robert Lighthizer – met with Chinese officials in Beijing in an effort to avert a trade war between the world’s two largest economies over tariff threats.

After the discussions, Washington and Beijing agreed to address the trade imbalance and China said it would import more energy and agricultural products from the US.

Mnuchin went on “Fox News Sunday” on May 20 to proclaim: “We are putting the trade war on hold.”

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https://nypost.com/2018/05/30/china-vows-to-protect-its-interests-from-reckless-us-trade-threats/

Donald Trump’s tariff threats complicate US-China trade talks — “The current US administration is not trustworthy.”

May 30, 2018

Negotiators scramble to finalise agricultural and energy deals after president renews attacks

Image may contain: 1 person, smiling, suit

Donald Trump’s latest threats are being seen by some simply as a negotiating tactic ahead of the next round of trade talks © Reuters

Tom Mitchell and Xinning Liu in Beijing

Donald Trump’s renewed tariff threats against Chinese exports have complicated efforts by US negotiators to finalise agricultural and energy deals ahead of a third round of high-level trade talks scheduled for Saturday, according to three people briefed on the negotiations.

They added that if the preparatory talks did not go well, weekend talks in Beijing between US commerce secretary Wilbur Ross and vice-premier Liu He could be cancelled. Chinese officials and analysts, however, remain cautiously optimistic that Mr Trump’s threats are politically inspired bluster that will not derail a larger trade deal between the world’s two largest economies.

They said Mr Trump’s surprise statement was consistent with his tendency to create uncertainty and pressure during business and political negotiations. It also fits with his general “America First” agenda that he promised voters would define his presidency.

“Trump is unpredictable, but also predictable,” one Chinese official said. “He has been a protectionist his whole life.” China’s commerce ministry issued a statement giving Beijing’s first official response to Mr Trump’s threat, saying it was “unexpected but also not a surprise”.

Wang Chong at the Charhar Institute, a Beijing-based think-tank, agreed that Mr Trump’s surprise statement was “just a threat”, adding that “China will still try its best to stop a trade war.”

Lester Ross, head of the policy committee at the American Chamber of Commerce in China and a partner at Wilmer Hale, described Mr Trump’s tariff threat as “fundamentally a negotiating step in advance of the next round of trade talks”.

“It’s part of an ongoing series of moves and countermoves,” he added.

The current US administration is not trustworthy, especially after Mnuchin just said we are [both] working on a framework to reduce trade friction.

A large group of US officials, including Treasury undersecretary David Malpass and agriculture undersecretary Ted McKinney, have arrived in the Chinese capital to finalise preliminary agreements relating to US exports of agriculture and natural gas. The agricultural talks are focused on existing technical barriers to US exports of chicken, pork, beef, rice and sorghum. US officials estimate that if these barriers are removed, American agricultural exports to China could double to $40bn.

In Tuesday’s announcement, Mr Trump pledged to announce tariffs on a final list of $50bn worth of Chinese industrial exports on June 15.

While the president’s threat appeared to reverse Treasury secretary Steven Mnuchin’s recent statement that a Sino-US trade war had been “ put on hold”, the actual implementation date was vague. In a statement released on Tuesday night, Beijing time, the White House said actual implementation of the tariffs would follow “shortly thereafter”.

“Trump’s statement put [the US team] in a tough position,” said one person briefed on the talks. “But this is pretty much the same place they were in two days ago. These tariffs were always in play and until they are implemented, they are on hold.”

While officials in Beijing understand that Mr Trump needs to defuse growing domestic political pressure over Chinese trade and investment issues, the US president risks backing his Chinese counterpart and Mr Liu into a similar corner.

In closed-door sessions with both Chinese and foreign officials over recent months, President Xi Jinping said that his administration did not want a trade war with the US but also warned that China “would respond if bullied”, according to three people briefed on the meetings.

When the US and China first threatened in early April to impose punitive tariffs on $100bn worth of bilateral trade, a senior Chinese commerce ministry official said both sides “were only putting everything on the table — it is time for negotiation and co-operation”.

But after Mr Trump then said he was considering imposing punitive tariffs on an additional $100bn worth of Chinese exports, officials in Beijing said they would not hold discussions with the US in the face of such threats. Formal talks between Mr Liu and his US counterparts did not get under way for another month.

“To evaluate Trump, you need to focus on what he does,” said Lu Xiang, an American affairs expert at the Chinese Academy of Social Sciences. “The current US administration is not trustworthy, especially after Mnuchin just said we are [both] working on a framework to reduce trade friction.” 

Mr Trump’s threat could also affect a quietly negotiated agreement in which his administration controversially said it would revise sanctions against a Chinese telecoms company, ZTE, in return for concessions including Chinese competition clearance of US chip company Qualcomm’s $47bn acquisition of NXP.

At the weekend Qualcomm and Chinese officials appeared to be closing in on a final agreement, according to people briefed on their discussions.

The delay has exacerbated concerns in China’s foreign investment community that such competition approvals can sometimes be used as bargaining chips. “China often delays handling larger international transaction [decisions] until after other major jurisdictions have acted,” said Mr Ross of AmCham China. “That puts China in a position . . . to impose remedies [and] industrial policy objectives may colour China’s decision-making process.”

https://www.ft.com/content/9c98ef28-63d8-11e8-90c2-9563a0613e56

China Set to Approve Qualcomm-NXP Deal, a Sign of Easing Trade Tensions — Why Did Trump Pull Back from China-U.S. Trade Dispute?

May 27, 2018

Chinese regulators have expressed concerns that the merged company would crowd out domestic businesses in areas such as mobile payments

Microprocessors sit on a circuit board displayed on the NXP Semiconductors pavilion at the Mobile World Congress in Barcelona, Spain, on March 2, 2015.
Microprocessors sit on a circuit board displayed on the NXP Semiconductors pavilion at the Mobile World Congress in Barcelona, Spain, on March 2, 2015. PHOTO: BLOOMBERG NEWS

Chinese authorities are set to approve Qualcomm Inc.’s QCOM 1.49% planned $44 billion acquisition of Netherlands-based NXP Semiconductors NXPI 4.74% NV in the next few days, according to people familiar with the matter, in what would be another significant step toward easing frayed U.S.-China trade relations.

China’s State Administration for Market Regulation, which has been conducting the antitrust review, will hold a meeting on the matter Monday, according to the people. They said a contingent of Qualcomm’s legal team arrived in Beijing this weekend to hammer out final details.

Approval would remove the last hurdle for a deal that has been stuck for months amid U.S.-China trade tensions, but one of the people said it could come with conditions. Chinese regulators have expressed concerns that the merged company would crowd out domestic businesses in areas such as mobile payments. NXP offers technology and services used for mobile payments.

The likely approval comes as the Trump administration is battling Congress to roll back penalties on Chinese telecommunications giant ZTE Corp., and as U.S. Commerce Secretary Wilbur Ross prepares to lead an interagency delegation to Beijing starting June 2, where he is set to meet China’s chief economic envoy, Liu He.

The acquisition of NXP is considered critical for San Diego-based Qualcomm, which is dominant in smartphone chips but is looking for growth in other areas. Among NXP’s products are chips for automobiles, a rapidly expanding sector as more technology is packed into cars.

Qualcomm had been waiting for Beijing’s approval to proceed with the purchase of the Dutch company, having secured permission from the eight other major antitrust regulators around the world.

A spokesman for China’s Commerce Ministry said last month that the agency had conducted a preliminary review of the Qualcomm deal’s impact on competitors and the market, and had found “issues that are hard to resolve, making it difficult to eliminate the negative impact.”

The State Administration for Market Regulation couldn’t be reached immediately for comment.

On Saturday, Qualcomm’s President Cristiano Amon spoke at the Big Data Expo in Guiyang, southern China. While he didn’t touch on the company’s plan to acquire NXP, he emphasized Qualcomm’s commitment to China. “China is very important for Qualcomm,” he said. “We’re rooted in China, we have developed a number of very strong partnerships. Nothing can separate us from China.”

Earlier this week, Qualcomm announced artificial intelligence-related tie-ups with several Chinese companies including Baidu Inc.

China had been holding up reviews of multibillion-dollar takeovers as leverage as Beijing seeks to fend off the Trump administration’s trade offensives. But since earlier this month, when President Donald Trump said in a tweet that he would step in to get ZTE back into business, Beijing has shown a willingness to ease the regulatory roadblocks faced by U.S. companies.

Donald J. Trump

@realDonaldTrump

President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!

Last week, China approved U.S. private-equity firm Bain Capital’s $18 billion purchase ofToshiba Corp’s memory-chip unit, a move seen as a gesture of goodwill as President Xi Jinping’s economic envoy, Mr. Liu, was visiting Washington for trade talks. That same week, China’s Vice President Wang Qishan told a group of visiting foreign business representatives, including a Qualcomm executive, that the Qualcomm and NXP deal stood a good chance of being approved by Chinese regulators, according to people with knowledge of the meeting.

The U.S. and its allies have been pressing Beijing to green light the deal. U.S. trade negotiators raised the issue with Mr. Liu recently in Washington, people briefed on the talks said. Chancellor Angela Merkel of Germany also lobbied for the deal in her meeting with Mr. Xi this week, according to a person with knowledge of the matter.

In the case of ZTE, the Trump administration is now working to ease U.S. sanctions that had threatened to shutter China’s second-largest telecom-equipment maker and the fourth-largest vendor of mobile phones in the U.S.

The U.S. Commerce Department last month banned U.S. companies from supplying the Chinese company for failing to live up to the terms of an agreement over ZTE’s evasion of sanctions on sales to Iran and North Korea. Qualcomm was one of ZTE’s key suppliers.

But Trump administration officials have been trying to negotiate a reprieve, saying that they never intended to put ZTE out of business and noting that the action is also hurting U.S. firms that supply ZTE.

That has drawn a backlash from Democratic lawmakers who say ZTE’s violations were serious and should be punished.

The developments come as both sides appear to be retreating from the brink of trade war, declaring a truce amid ongoing negotiations. China has agreed to buy more U.S. farm products, energy and services, and last week said it would slash tariffs on imported cars from 25% to 15% starting July 1.

Write to Yoko Kubota at yoko.kubota@wsj.com and Lingling Wei at lingling.wei@wsj.com

.

Why Did Trump Pull Back from China-U.S. Trade Dispute?

Our Peace and Freedom view: The Trump administration now knows why just about everyone in the world community kowtows to China. They are big, economically and by population, quick to employ arm twisting and coercion to get what they want, and involved everywhere. Trump may think he needs China to help get North Korea to the summit table rights now. China is almost constantly harassing U.S. allies like Taiwan, the Philippines and others. After Trump pulled the U.S. out of the Iran nuclear deal, China said they’d still buy Iran’s oil. Trump needs China to keep buying U.S. agricultural products and the U.S. is seeking ways to sell China more oil and LNG. In the South China Sea and virtually everywhere else Trump may want increased U.S. influence, China stands in his way. And China is not “becoming more like us.” China plays by differt rules. Ask Australia.

Related:

Trump Team Seeks Truce With Congress Over ZTE

May 26, 2018

Administration seeks a deal to help Chinese telecom firm survive

Commerce Secretary Wilbur Ross, shown at a congressional hearing in March, is preparing to lead a trade delegation to Beijing next week.
Commerce Secretary Wilbur Ross, shown at a congressional hearing in March, is preparing to lead a trade delegation to Beijing next week.PHOTO: SAUL LOEB/AGENCE FRANCE-PRESSE/GETTY IMAGES

The Trump administration scrambled this week to keep lawmakers from undermining coming trade talks with China, pressing them not to block a deal to roll back penalties on Chinese telecommunications giant ZTE Corp.

President Donald Trump said he has put together a deal to help ZTE survive, despite a U.S. Commerce Department ruling that the company had failed to live up to the terms of an agreement over ZTE’s evasion of sanctions on sales to Iran and North Korea. On Friday evening, he lashed out at Democratic lawmakers who opposed his plan. “Dems do nothing…but complain and obstruct,” he tweeted.

Many lawmakers have resisted any move to help ZTE, which was forced to suspend operations after the Commerce Department banned U.S. suppliers in April from providing it with key components to its business as a punitive measure. Beijing has made the resolution of the issue a top agenda item in negotiations.

Amid the controversy, Commerce Secretary Wilbur Ross is preparing to lead an interagency delegation to Beijing, starting June 2. There, he will confer with China’s chief economic envoy, Liu He. The two men talked this week and set up the session. The high-profile assignment for Mr. Ross marks his re-emergence as a major player in U.S.-China economic relations, after being sidelined for about a year.

The ZTE issue is bound to be on the agenda for the coming talks, unless it is settled before Mr. Ross and the delegation arrive in Beijing.

Along with the ZTE talks, the U.S. and its allies are pressing Beijing to approve U.S. chip maker Qualcomm Inc . ’s bid for NXP Semiconductors NV. U.S. negotiators raised the issue with Mr. Liu recently in Washington, people briefed on the talks said. Chancellor Angela Merkel of Germany also lobbied for the deal in her meeting with President Xi Jinping of China this week, according to a person with knowledge of the matter.

Mr. Trump said he was planning to reverse the penalties on ZTE. He tweeted earlier in May that he and Mr. Xi were “working together to give massive Chinese phone company, ZTE, a way to get back into business, fast.”

Why Trump’s ZTE U-Turn Has Sparked Backlash

President Trump’s mixed messages about a plan to help controversial Chinese telecom giant ZTE has baffled Washington. WSJ’s Shelby Holliday breaks down three reasons why lawmakers see the company as a threat. Illustration: Adam Falk

The tweet prompted a strong response from lawmakers, including Mr. Trump’s fellow Republicans, who accused him of irresponsibly conflating trade and national-security issues.

Late on Wednesday, Mr. Ross and Treasury Secretary Steven Mnuchin met with top Republican senators in an attempt to assure them that ZTE was being treated as a national-security issue and as such was being discussed on a separate track from trade negotiations, according to people briefed on the meeting.

They also said there would be no quid pro quo for Chinese purchases of agricultural or energy goods; they asked members to ease off their criticism to give the administration more time to work out a deal, the people said.

Sens. John Cornyn (R., Texas), Marco Rubio (R., Fla.) and Tom Cotton (R., Ark.) were among those who attended the meeting, which began in Mr. Cornyn’s office and later moved to a secure facility, the people familiar with the matter said. Senators’ reactions were mixed, with some appearing open to the administration’s position and others staying firm in their opposition, the people said.

“When the Commerce Department denied ZTE access to semiconductors for seven years they knew full well it would put them out of business,” Mr. Rubio said Friday. “To now argue that the penalty needs to be adjusted because that wasn’t the intent isn’t credible. The world will see this weakening of penalties as yet another example of the U.S. backing down under Chinese pressure.”

But aides to Messrs. Cornyn and Cotton said the lawmakers were now confident that the administration is keeping national-security concerns separate from trade talks.

While Mr. Cotton supported the original penalty that the Commerce Department imposed on ZTE, “between the administration’s response and likely congressional action he anticipates equally far-reaching penalties against ZTE,” said Caroline Tabler, Mr. Cotton’s spokeswoman, in a statement Friday.

But the controversy gave an opening for Mr. Trump’s Democratic opponents to portray him as weak on China.

Rep. Nancy Pelosi of California, the House Democratic leader, tweeted that Mr. Trump was “using U.S. government resources to enrich ZTE (a foreign company designated as a national cybersecurity risk).” Sen. Chuck Schumer of New York, the chamber’s Democratic leader, tweeted: “If the administration goes through with this reported deal, President Trump would be helping make China great again.”

Administration officials teased out the outlines of a new plan to resolve the ZTE issue throughout the week, with Mr. Trump saying in remarks at the White House on Tuesday that he envisioned a fine of more than $1 billion for ZTE, potentially reaching $1.3 billion. He said ZTE should install new leadership and buy more U.S. products.

Donald J. Trump

@realDonaldTrump

Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion.

On Thursday morning, Mr. Ross said in an interview on CNBC that any deal with ZTE would also involve “implanting people of our choosing into the company to constitute a compliance unit, and that unit would report back to the Department of Commerce.” That followed a tweet of Mr. Trump’s that a “different structure,” would be needed to “verify results” of any U.S.-China trade negotiations.

In Mr. Trump’s tweet on Friday, he confirmed parts of the deal, writing in reference to ZTE: “I closed it down then let it reopen with high level security guarantees, change of management and board, must purchase U.S. parts and pay a $1.3 Billion fine.”

Mr. Ross finalized his plans for his trade mission to Beijing on Thursday. Treasury Undersecretary David Malpass is scheduled to be part of the delegation, as are representatives from other agencies. They will focus on boosting U.S. exports to China—part of the U.S. demand that Beijing reduce the vast U.S. trade deficit with the country by $200 billion by 2020.

The group also plans to press China to make structural changes in its economic model, especially reducing subsidies to state-owned companies, which give them a leg up in international competition, people familiar with the talks said.

Mr. Trump’s focus on the trade deficit is bound to take center stage, as it has in past negotiating rounds. The Commerce Department has been reaching out to U.S. energy companies, especially those that produce liquefied natural gas, to see what deals they could make with China, a person briefed on those talks said. The U.S. is asking those companies to try to book the deals in 2018, rather than later years, and probed the firms about how they will value the deals, the person said.

In Beijing, China Petroleum & Chemical Corp., or Sinopec, said it plans to double its crude oil imports from the U.S.

Based on Friday’s oil prices, that would translate into about $6 billion of U.S. imports, a Sinopec executive said. “Our demand for crude oils is increasing, while the U.S. has become a net exporter of crude oils,” said Lu Dapeng, a Sinopec spokesman.

But it is unclear whether those purchases would involve fresh U.S. production, or rather a diversion of oil now sold to other markets. In negotiations with China last year, Mr. Ross announced deals worth $250 billion, which was widely criticized as an inflated number.

Write to Kate O’Keeffe at kathryn.okeeffe@wsj.com, Bob Davis at bob.davis@wsj.com and Lingling Wei at lingling.wei@wsj.com

Appeared in the May 26, 2018, print edition as ‘Trump, Congress Spar Over China Tech Firm.’

https://www.wsj.com/articles/trump-team-seeks-truce-with-congress-over-zte-1527268466

Pakistan’s New Budget “Showers” Incentives, Tax Exemption and Give-Aways in Big Debt Spending Plan

April 28, 2018

ISLAMABAD: The Finance Act 2018 contains a wide array of incentives given to business enterprises, as well as reiterating the terms of the voluntary disclosure of assets scheme that has already been announced.

From LNG to coal, livestock to stationery, every sector and every type of business enterprise has been showered with exemptions and tax reductions. Such large and widespread incentives have rarely been seen.

With the increase of Rs500 billion in the Federal Board of Revenue’s target, the PML-N government has introduced new revenue measures of around Rs93.32bn. The populist relief measures worth Rs184.5bn outpace the revenue measures in the last budget of the incumbent government.

Duty on CKD kits for electric cars reduced to 10pc from 50pc

The breakdown of the new tax measures shows an amount of Rs13.95bn worth income tax measures, Rs50.4bn of sales tax and FED and Rs28.97bn customs duty. FBR eyes to collect maximum revenue from depreciation of rupee at the import stage.

Analysis: Crisis looms in election-year budget

The relief measures announced are unprecedented and cost the government Rs184.5bn. Of them, Rs6.2bn relief was given in customs, Rs28.96bn in sales tax and FED and Rs149.34bn in income tax.

Income Tax

To incentivise big business, the government has come up with a five year plan to reduce corporate tax rate from 30 per cent to 25pc by 2023. This reduction will be carried out 1pc each year starting from 2019 when corporate tax rate will come down to 29pc.

Similarly, the super tax will be phased out by tax year 2021. It is proposed to reduce it 3pc on banking company and 2pc on person other than a banking company, having income equal to or exceeding Rs500m.

The increase in threshold announced earlier was partially reversed. A flat rate of Rs1,000 will be charged on income between Rs400,000 and Rs800,000 while in case the income exceeds Rs800,000 but remain less than Rs1,200,000 the flat rate of tax will be Rs2000.

In order to extend the lower rate of tax, the maximum tax rate for all individuals including salaried class was reduced to 15pc. For salaried class, the highest rate was 30pc while in case of non-salary individual the rate was 35pc.

To extend the benefit to association of persons, the highest tax rate was reduced to 30pc from 35pc. The tax slabs were also reduced to six from seven.

6pc relief for RLNG imports

To facilitate public companies, the condition of distributing 40pc of after tax profits is being reduced to 20pc and the applicable tax rate on accounting profit in case of failure to disburse undistributed profit (dividend) is being reduced from 7.5pc to 5pc.

All the three credits available to companies are proposed to extend to June 30, 2019 — extension, expansion, balancing modernisation and replacement of plants at the rate of 10pc of the amount invested; provision of tax credit on new industrial undertaking; tax credit for the purchase and installation of plant and machinery through at least 70pc new equity.

The tax rate on transfer of banking instruments, which are in excess of Rs50,000 was reduced to 0.4pc from 0.6pc for non-filers. The 5pc tax on bonus share was withdrawn.

To encourage investment in shares/sukuks, the limit of Rs1.5 million has been increased to Rs2m to avail a tax credit.

The limit of recovery amount through attachment of bank account was reduced to 10pc of tax payable from 25c during pendency of first appeal.

The minimum threshold of tax deduction on payment of goods was enhanced from Rs10,000 to Rs30,000 while in the case of services the limit was raised to Rs75,000 from Rs25,000, respectively.

The minimum penalty for failure to file withholding statement was reduced to Rs5,000 from Rs10,000. The minimum penalty will be imposed only if withholding statement is filedwithin three months of due date.

The reduced rate of 0.5pc for large trading houses was extended till 2021. The facility of availing low tax rate was extended to all persons appearing in Azad Jammu and Kashmir and Gilgit-Baltistan Council Board of Revenue as filer under the income tax ordinance 2001.

The advance tax on purchase of property will be collected piecemeal with each installment. The rate of withholding tax on payment of dividend by a rental REIT scheme to a filer has been reduced from 12.5pc to 7.5pc, exempted 5pc withholding tax on issuance of bonus shares to Mutual Funds.

In order to promote microfinance banks, profit of debt derived by non-profit organisations from micro-finance banks will also qualify as income eligible for 100pc credit.

The tax on commission earned by member of stock exchange has now been made adjustable.

104 tariff lines zero rated for custom duty

To encourage and promote film-making in Pakistan, 50pc tax rebate will be allowed to foreign film makers making films in Pakistan and a 50pc tax reduction in income tax liability will be allowed to companies deriving income from film making for a period of five years.

All allowances of armed forces personnel are exempted from tax. Exemption has also been accorded to capital gains tax on the resale of Pakistan Mortgage Refinance Company Limited bonds by the investors to encourage its marketing and increase its effectiveness.

The tax rate on import of coal by manufacturers as well as commercial importers has been reduced to 4pc for filers and 6pc for non-filers.

The mechanism of alternative dispute resolution is revamped, the selection for audit on the basis of late filing of return is abolished and a taxpayer can only be selected for audit once in three years. The obligation to act as withholding agent to be deferred to the succeeding year.

Explore: Standout features and key talking points from Budget 2018-19

Income Tax Revenue Measures

The set off brought forward depreciation losses have now been limited to the extent of 50pc of the business income for a tax year except in instances where the taxable income is up to Rs10m. Earlier, unabsorbed depreciation losses can be carried forwarded indefinitely which leads to payment of less or nil tax liability.

Banks will collect 1pc withholding tax from filers and 3pc from non-filers in respect of credit/debit card transactions resulting in outward flow of remittances from Pakistan.

The commercial importers are now entitled to file their income tax returns declaring their taxable income and the tax paid at import stage will now constitute minimum tax instead of final tax.

For sales/supplies, the rate of withholding tax for non-filers has been increased from 7pc to 8pc in the case of companies and from 7.75pc to 9pc in the case of persons not being companies. For contracts, the rate of tax for non-filers was enhanced from 12pc to 14pc in the case of companies and from 12.5pc to 15pc in the case of persons not being companies.

Marriage halls are now required to collect either 5pc of the bill or Rs20,000 per function in major cities and Rs10,000 per function in the remaining cities, whichever is higher. Moreover, the non-recognition of capital gain on gift was restricted to relatives.

To provide a level playing field, the tax deductible on services rendered/provided by permanent establishments of non-resident persons will also be treated as minimum tax.

As the prices of high speed diesel are to be deregulated, tax on dealers margin are now to be collected on ex-depot sale price of HSD (excluding dealers margin) at the rate of 0.5pc from a filer and 1pc from a non-filer.

Sales Tax

Sales tax exempted on import of paper weighing 60 g/m2 for the printing of Holy Quran. The finance act has also waived the 3pc value addition tax on import of LNG; rate of sales tax was reduced from 17pc to 12pc on import of LNG by Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL)and on supply of RLNG by these companies to Sui Northern Gas Pipeline Limted.

 Image result for Pakistan State Oil, LNG, photos

It introduces a uniform rate of 3pc sales tax on all fertilizers across the board and to provide for reduced rate from 10pc to 5pc on supply of natural gas to fertiliser plants for use as feed stock. Moreover, rate of sales tax on LNG imported by fertiliser manufacturers for use as feed stock is also being exempted.

It was proposed to exempt 17pc sales tax to fans for dairy farms, preparations for making animal feed and bovine semen. Likewise, 10pc sales tax on Fish Feed exempted. Moreover, sales tax on agriculture machinery is also reduced from 7pc to 5pc.

0pc tax on fresh investment in oil refining

Zero rating on import of potato is being granted retrospectively on 200,000 metric tonnes imported during the period May 5, 2014 to July 31, 2014.

Exemption is being granted to Karachi Shipyard Engineering Works Limited on import of machinery, equipment, raw materials, components etc.

Image may contain: one or more people, sky and outdoor

Karachi Shipyard

Sales tax is also exempted on import of 21 types of computer parts, and promotional, advertising materials for display at exhibitions. Sales tax reduced to 5pc from 17pc on import of 19 items of cinematographic equipment for revival of film industry for five years.

One time exemption granted on import of plant and machinery for setting up of Special Economic Zone and for installation in that zone by zone enterprises, zero-rating restored on stationery items, reduce rate of 6pc allowed on import of ready to use articles of artificial leather, further tax at the rate of 1pc allowed on local supply of finished fabric, the rate of extra tax and 2pc further tax was extended to Pakistani foam manufacturers.

Reag the rest:

https://www.dawn.com/news/1404367/budget-2018-19-incentives-galore-as-cost-of-relief-exceeds-new-revenue-measures