Annual Report 2012

Financial Statements (PRC)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended 31 December 2012
3 SIGNIFICANT ACCOUNTING POLICIES (Continued)
(25) Related parties
If a party has the power to control, jointly control or exercise significant influence over another party, or vice versa, or where two or more parties
are subject to common control, joint control from another party, they are considered to be related parties. Related parties may be individuals or
enterprises. Where enterprises are subject to state control but are otherwise unrelated, they are not related parties. Related parties of the Group
and the Company include, but not limited to:
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(a) the holding company of the Company;
(b) the subsidiaries of the Company;
(c) the parties that are subject to common control with the Company;
(d) investors that have joint control or exercise significant influence over the Group;
(e) enterprises or individuals if a party has control, joint control over both the enterprises or individuals and the Group;
(f) jointly controlled entities of the Group, including subsidiaries of the jointly controlled entities;
(g) associates of the Group, including subsidiaries of the associates;
(h) principle individual investors of the Group and close family members of such individuals;
(i) key management personnel of the Group, and close family members of such individuals;
(j) key management personnel of the Company’s holding company;
(k) close family members of key management personnel of the Company’s holding company; and
(l) an entity which is under control, joint control of principle individual investor, key management personnel or close family members of such
individuals.
(26) Segment reporting
Reportable segments are identified based on operating segments which are determined based on the structure of the Group’s internal
organisation, management requirements and internal reporting system. An operating segment is a component of the Group that meets the
following respective conditions:
– engage in business activities from which it may earn revenues and incur expenses;
– whose operating results are regularly reviewed by the Group’s management to make decisions about resource to be allocated to the segment
and assess its performance; and
– for which financial information regarding financial position, results of operations and cash flows are available.
Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segment reporting, and segment
accounting policies are consistent with those for the consolidated financial statements.
4 TAXATION
Major types of tax applicable to the Group are income tax, consumption tax, resources tax, value added tax, special oil income levy, city construction
tax, education surcharge and local education surcharge.
The consumption tax rates on gasoline, diesel, naphtha, solvent oil, lubricant oil, fuel oil and jet fuel oil changed to RMB 1,388.0 per tonne, RMB
940.8 per tonne, RMB 1,385.0 per tonne, RMB 1,282.0 per tonne, RMB 1,126.0 per tonne, RMB 812.0 per tonne and RMB 996.8 per tone,
respectively.
As at 31 December 2012, the resources tax rate of crude oil and natural gas is 5%.
Value added tax rate for liquefied petroleum gas, natural gas and certain agricultural products is 13% and that for other products is 17%.
The Ministry of Finance imposed a special oil income levy on any income derived from the sale by an oil exploration and production enterprise of
locally produced crude oil exceeding a standard price. Effective from 1 November 2011, the levy starts at USD 55 per barrel instead of previous
USD 40 per barrel and the imposed rate ranges from 20% to 40%.
Except for subsidiaries listed below, the income tax rate applicable to the company and its subsidiaries is 25%.
The entity granted with tax concession is set out below:
Name of subsidiaries Preferential tax rate Reasons for granting concession
Sinopec Hainan Refining and 2-year exemption and 3-year Foreign investment enterprise
Chemical Company Limited 50% reduction
Annual Report 2012 CHINA PETROLEUM & CHEMICAL CORPORATION