Environmental protection tax comes at New Year’s Day!

12 Dec 2017/CTW



On 25th December 2016, the Environmental Protection Tax Law of the People's Republic of China(PRC) was passed during the 25th session of the 12th National People’s Congress Standing Committee. Now, it will come into effect on New Year’s Day. As it gave regions the power to set their own tax rates, several regions have already drawn up new environmental protection schemes. They will start to charge companies according to the amount of air, water and even noise pollution they produce.

According to the Table of Environmental Tax Items and Rates enclosed in the Environmental Protection Tax Law of PRC, air pollutants will be levied at Yuan 1.2-12 per kilo of pollution equivalent, while water pollutants will be charged at Yuan 1.4-14 per kilo of pollution equivalent. The interesting thing is that, in terms of tax rate of the major pollutants, like sulfur dioxide and nitrogen oxide, Guangdong has a relatively low rate but Shandong is 5 times higher than national minimum rate. 


Shandong saw a high tax rate for sulfur dioxide and nitrogen oxide.

On 28th November, Guangdong province has put forward the environmental protection plan for air and water pollutants pollutants. In the plan, air pollutants will be levied at Yuan 1.8 per kilo of pollution equivalent, while water pollutants will be charged at Yuan 2.8 per kilo of pollution equivalent.

As for Shandong province, it has also proposed a Consultation Paper on Draft, which would finalize tax items and tax rates of air and water pollutants. In the Draft, the sulfur dioxide and nitrogen oxide will be levied at Yuan 6 per kilo of pollution equivalent, which is much higher than national minimum rate, Yuan 1.2 per kilo of pollution equivalent. The water pollutants will also be charged at higher rates, reaching Yuan 1.4 per kilo of pollution equivalent.  


Environmental protection tax schemes in different provinces

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It it worth noted that the subject of the responsibility has been changed with the new environmental protection tax law. Previously, it is the tax authority identifies tax that taxpayers should pay. Now, the taxpayers can declare tax by themselves. Besides, they take the responsibility to ensure veracity and integrity of their tax declaration.


Conditional tax reliefs encourage companies to reduce emissions.

In order to encourage companies to reduce emissions, the new environmental protection tax law adds tax relief category. Taxpayers can get 25% off if they lowered their air and water pollutants by 30% of the national and provincial standards. And they can receive 50% off if they lowered their air and water pollutants by half of the national and provincial standards. 

The new law also encourages companies and government sponsored institutions to make a central treatment for household waste and sewage. The law sets two conditions for tax exempt status:

The companies and government sponsored institutions are exempt from paying environmental protection tax if they can discharge their sewage and waste to centralized treatment plant; If they can store and dispose the solid waste in facility and place in conformity with national standards, they are also eligible for free environmental protection tax.

source of cover:chinalawtranslate.com




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