China's nationwide automatic fuel invoicing: a tax compliance reset for the retail fuel market

| What the policy actually requires

Automatic invoicing is a compliance measure and does not raise taxes. Once a sale is completed, an invoice is issued straight away through the national Leqi platform, with no need for the customer to ask. Fuel type, volume and dispenser ID are captured directly from the dispenser's tax-reporting interface, so invoices follow what physically left the pump.

Coverage is broad, third-party payments, online platforms, fuel cards, cash, credit sales and corporate bank transfers all fall within scope. Fuel-card operators must pick one route, either a non-taxable ordinary invoice at top-up or an invoice for each fuel purchase, and the two cannot be mixed. Payments collected through QR codes registered to third parties, and not to the station operator are now explicitly covered by the rules. Violations can bring fines, back taxes, late-payment surcharges and penalties that can reach several times the tax left unpaid.

| Enforcement moves from local campaigns to nationwide monitoring

Earlier enforcement relied on local pilots and case-by-case inspections, which left gaps. The new system links dispensers, station-management software, payment flows and invoices, so regulators can trace individual sales. Removing a tax-control module from a dispenser triggers an alert, which makes tampering easier to spot.

Industry feedback points to enforcement intensity not seen before, and no workable way around the system has emerged so far. Leqi automates invoicing but does not check whether the source data is accurate. Compliance still depends on honest dispenser data, payments landing in the operator's own corporate accounts, and reconciled purchase, sales and inventory records. Attention is therefore shifting from checking invoices to cross-checking data from several sources, with third-party payment codes and mismatches between dispenser volumes and invoiced volumes standing out as red flags.

| Private stations face the sharpest adjustment

State-owned and foreign-operated stations already invoice nearly all of their sales, so their main task is system integration. Private stations that have relied on off-invoice supply face a different picture. An estimated fifth to a quarter of private-station sales currently move without invoices, and once supply involving partial tax avoidance is included, the share rises to well over half.

Buying properly invoiced fuel costs these stations more than 1,000 yuan per tonne extra for gasoline and several hundred yuan per tonne extra for diesel, and both gaps are wider than current retail margins. Theoretical retail profit margins sit near three-year lows, squeezed by high international crude prices and regulated domestic pump prices. Diesel margins have slipped slightly below zero in some recent readings. Discounting will continue, but it will follow station economics and demand conditions and will no longer rest on tax arbitrage.

| End-users feel it at the pump

Truck fleets that refuel informally at logistics parks and construction sites have enjoyed a double discount, a lower price than regular stations plus a further reduction for going without an invoice. Together these have often exceeded 1 yuan per litre. As that cushion shrinks, diesel loses part of its cost advantage, which could speed up fuel substitution. New-energy heavy-duty trucks already took close to half of new truck sales in August, a year-to-date high, and higher diesel costs add to that momentum.

| A shrinking and more concentrated station network

Over the longer term, location, traffic and fuel quality are likely to separate winners from losers. The major state-owned oil companies are expected to regain customers as non-compliant stations drop out. Foreign operators benefit from standardised systems and brand trust, although franchise networks may still contain compliance gaps. Private operators will split into two groups, with compliant stations staying viable and those dependent on tax avoidance facing falling sales and profit margins.

GL Consulting (premium think tank under Mysteel Group) expects the national station count to fall by roughly 10,000 on a net basis between 2025 and 2030. Stations selling substandard fuel at artificially low prices, or labelling products as "new-energy fuel" to avoid tax, are the most likely to exit.

| Independent refiners come under pressure

Much of the off-invoice fuel at private stations originates at independent refineries. In Shandong, around 40% of independent refiners' gasoline and diesel output is still sold with no invoice or under chemical-product invoices, which lowers tax liabilities and allows lower ex-refinery prices. Automatic invoicing at retail would close much of this channel, narrowing the price gap with major state-owned refiners, which stood at roughly 1,000 yuan per tonne for 92# gasoline and above 600 yuan per tonne for 0# diesel in 2025.

As that advantage fades, stations are likely to favour compliant, reliable supply, and major refiners may cut external purchases. Declining gasoline and diesel consumption, excess low-end capacity and limited higher-value petrochemical output add to the strain on independent refiners, and some inefficient capacity could exit as a result.

| The next policy milestone to watch

The transaction data and systems being built now could support a shift of refined-product consumption tax collection from the production and import stage to the retail stage, with timing around 2027. Such a move would further erode the grey-market margins that underpin many private stations and would largely remove the tax-avoidance route at the refinery gate. For now, the key watchpoints are new evasion methods, differences in local enforcement, and how consistently penalties are applied.

Automatic invoicing leaves the tax rate unchanged and instead closes the gap between what is sold and what is declared. The near-term effect is higher costs for stations and users that depended on off-invoice fuel, and the longer-term effect is a leaner, more concentrated retail market with less room for independent refiners to compete on tax advantage. The policy also lays the groundwork for a possible consumption tax shift to retail, which would extend the pressure further up the supply chain.

The above content is the major conclusions and highlights extracted from the "China to Roll Out Automatic Fuel Invoicing Nationwide from November" chapter of the latest China Policy Perspective (produced by GL Consulting).

The full chapter includes a detailed breakdown of compliance risks and enforcement checks, retail margin charts for gasoline and diesel, the history of ex-refinery price spreads, and a regulatory timeline for crude oil and refined products.

For the full report, please contact inquiries@mysteel.com.