China's Ministry of Finance and State Administration of Taxation have jointly issued preferential tax policies on gas-mining in coal mines in an effort to encourage clean and safe production.

The new policies will take effect on July 1 this year.

According to the new policies, gas-mining enterprises will first need to pay value-added tax before enjoying a tax rebate at a later date.

Gas-mining enterprises are encouraged to use the tax rebate to research and develop gas-mining technologies and to expand their production.

Currently, no resources tax is levied on gas-mining enterprises.

The new policies also allow enterprises to use tax to offset 40percent of the fund they use to purchase new equipment.

Gas-mining enterprises can also offset 50 percent of their annual funds used in technological development with corporate income tax.

The government will grant subsidies for enterprises to develop new technologies.

China exploited 3.2 billion cubic meters of gas last year, up 40 percent year on year. It used about 1.2 billion cubic meters of gas, a rise of 20 percent.

The number of gas-related accidents dropped by 21 percent and the death toll from gas-related accidents dropped by 39.2 percent in 2006 from the previous year, according to the State Administration of Work Safety.

China reported 158 gas-related accidents, each claiming three lives or more, in coal mines in 2005.