China could reduce the tax rebate on crude imports by almost half, with a hike in the domestic fuel price and reduced global crude oil prices improving refinery margins, according to Reuters.

The tax rebate, which amounts to three-fourth of the 17% value-added tax on crude imports, could be reduced to around 40%, reported the news source.

The subsidy is determined by the change in international crude oil prices and the level of refining losses, according to a senior Sinopec official.

The Sinopec official said that the Chinese government is considering a cut in the subsidy, following the 20% hike in gasoline and diesel prices in June 2008, easing refiners’ margins.