CHINA: July 1, 2008


BEIJING - China will slash value-added tax (VAT) on dimethyl ether (DME), an alternative fuel used in diesel and petrol engines, to boost the development of alternative energy amid soaring world prices.


The government will cut VAT on dimethyl ether, a low emissions fuel, from 17 percent to 13 percent starting from July 1, the Ministry of Finance said in a notice posted on its website on Monday. It provided no other details.

The adjustment removes the gap between the VAT rate levied on DME and other fuels, including liquefied gas and natural gas, and would boost DME production, Xinhua news agency said, citing experts.

China, worried about securing energy supplies to feed its voracious economy, and facing worsening environmental degradation from its addiction to coal, has pledged to increase its use of cleaner fuels and bolster renewable energy sources.

It has begun introducing DME-fuelled buses into cities, with financial capital Shanghai putting more than 90 into operation this year, up from 10 last year, Xinhua said. It plans to have 1,000 in service by 2010, the agency said. (Reporting by Ian Ransom; Editing by William Hardy)


REUTERS NEWS SERVICE