Tips for New Legislations in Feb. 2017
Interpretation of the Environmental Protection Tax Law of the People's Republic of China
Notes by EHS.CN
The Environmental Protection Tax Law of the People's Republic of China was adopted on December 25, 2016, and shall come into force on January 1, 2018. As China's first special separate tax law to demonstrate "green tax system" and to promote the construction of ecological civilization, how will its promulgation and implementation affect enterprises' production? There is nearly one year until it comes into force. During this period, what shall enterprises do? How to make changes? The interpretation by EHS.CN is as followed.
Key word one: who are taxpayers
Article 2 Within the territory of the People's Republic of China and other sea areas under the jurisdiction of the People's Republic of China, the enterprises, public institutions and other producers and operators that directly discharge pollutants to the environment are taxpayers of environmental pollution tax, and shall pay environmental pollution tax in accordance with the provisions of this Law.
Article 3 For the purpose of this Law, “taxable pollutants” means the air pollutants, water pollutants, solid wastes and noises as prescribed in the Schedule of Tax Items and Tax Amounts of Environmental Protection Tax and the Schedule of Taxable Pollutants and Equivalent Values.
Article 5 Where a centralized urban and rural sewage or domestic garbage treatment site established in accordance with the law discharges taxable pollutants to the environment in excess of the discharge standards as prescribed by the state or the local area, it shall pay environmental protection tax.
Where an enterprise, public institution or any other producer or operator that stores or disposes of solid wastes fails to comply with the national or local environmental protection standards, it shall pay environmental protection tax.
Article 26 An enterprise, public institution or any other producer or operator discharging taxable pollutants directly into the environment shall pay environmental protection tax as prescribed in this law and shall be responsible for any damage caused by it according to law.
Notes by EHS.CN
An enterprise, public institution or any other producer or operator discharging taxable pollutants in the territory, territorial seas and airspace of the People's Republic of China are payers of environmental protection tax. Ordinary people are not taxpayers of environmental protection tax, or not the direct taxpayers. Is it better to pay more environmental protection tax? Certainly not. In addition to pay environmental protection tax, anyone discharging taxable pollutants shall be responsible for the damage caused by pollutants hereof according to law, so as to prevent enterprises' concept of wantonly discharging pollutants after paying taxes. Therefore, more environmental protection taxes do not mean better. Do not forget the Environmental Protection Law while paying the environmental protection taxes.
Key word two: how much to pay——set the maximum and minimum for applicable tax rate
Article 7 The tax base for taxable pollutants shall be determined by using the following methods:
(1) The tax base for taxable air pollutants shall be determined on the basis of the pollutant equivalency values converted from pollutant emissions.
(2) The tax base for taxable water pollutants shall be determined on the basis of the pollutant equivalency values converted from pollutant discharges.
(3) The tax base for taxable solid wastes shall be determined on the basis of the discharges of solid wastes.
(4) The tax base for taxable notices shall be determined on the basis of the decibels in excess of the standards as prescribed by the state.
Article 11 The environmental protection tax amount payable shall be determined by using the following methods:
(1) The tax amount payable for taxable air pollutants is the pollutant equivalency values multiplied by the applicable tax rate;
(2) The tax amount payable for taxable water pollutants is the pollutant equivalency values multiplied by the applicable tax rate;
(3) The tax amount payable for taxable solid wastes is the discharging amount of solid wastes multiplied by the applicable tax rate;
(4) The tax amount payable for taxable notices is the applicable tax rate corresponding to the decibels in excess of the standards as prescribed by the state.
Article 6 Tax items and tax amounts of environmental protection tax shall be governed by the Schedule of Tax Items and Tax Amounts of Environmental Protection Tax attached to this Law.
The people's governments of all provinces, autonomous regions and municipalities directly under the Central Government shall, by taking into overall consideration the environmental carrying capacities, status quo of pollutant discharges, and the requirements of economic, social and ecological development goals, determine and adjust the specific tax amounts applicable to taxable air pollutants and water pollutants within the range of the tax amounts as prescribed in the Schedule of Tax Items and Tax Amounts of Environmental Protection Tax attached to this Law, and report them to the standing committees of the people's congresses at the same levels for decision, and to the Standing Committee of the National People's Congress and the State Council for recordation.
Notes by EHS.CN
The people's governments of all provinces, autonomous regions and municipalities directly under the Central Government may choose the specific applicable tax rate within the above mentioned range. It is a double-edged sword, which can play the role of local government' initiative but may also make tax systems of different places different, especially the different tax rate for enterprises of the same industry caused by local government's non environmental protection motives will affect enterprises' willing to implement the new law. What is the applicable tax rete of each place? It needs further specific standards and requirements. We will keep our eyes on it and interpret on time, please pay attention to the updates on the EHS.CN.
Key word three: preferential tax policies, tax reduction and exemption
Article 12 Exemptions from the environmental protection tax includes:
(1) taxable pollutants from agriculture (except those from large-scale animal husbandry);
(2) taxable pollutants from mobile pollution sources including motor vehicles, locomotives, non-road mobile machinery, ships and aircraft;
(3) taxable pollutants discharged from urban sewage treatment plants or urban domestic waste treatment plants established according to law, as long as the pollutants meet national and local environmental protection standards;
(4) solid wastes comprehensively used by taxpayers satisfying national and local environmental protection standards;
(5) other exemptions approved by the State Council.
The former five exemption provisions shall be reported to the Standing Committee of the National People's Congress for record by the State Council.
Article 4 Where an enterprise, public institution or any other producer or operator falls under any of the following circumstances, it shall not be deemed as directly discharging pollutants to the environment, and shall not pay environmental protection tax on the corresponding pollutants:
(1) It discharges taxable pollutants to a centralized sewage or domestic garbage treatment site established in accordance with the law.
(2) It stores or disposes of solid wastes at any facility or site that meets the national and local environmental protection standards.
Article 13 Where the concentration of the taxable air pollutants or water pollutants discharged by taxpayers is less than 30% of the pollutant discharging standards prescribed by the State or local governments, the levy of the environmental protection tax can be reduced by 75%. Where the concentration of the taxable air pollutants or water pollutants discharged by taxpayers is less than 50% of the pollutant discharging standards prescribed by the State or local governments, the levy of the environmental protection tax can be reduced half.
Notes by EHS.CN
Where the taxable pollutants discharged by taxpayers is less than 50% of the pollutant discharging standards prescribed by the State or local governments and do not exceed the total controlling volume , the levy of the environmental protection tax can be reduced half. More pollutants discharged, more tax to be paid, even legal responsibilities to bear. Enterprises making positive contribution to the environmental protection can gain the tax preference (paying less tax), which will encourage enterprises to keep making innovation in environmental protection so as to achieve the "green development", really letting the environmental tax to play its due role.
Key word four: tax levy and management —— information sharing
Article 14 The environmental protection tax shall be levied and managed by the tax authorities according to the Law of the People's Republic of China on the Administration of Tax Collection and this law.
The competent authorities of environmental protection shall be responsible for the monitoring and management over pollutants according to this law and relevant laws and regulations concerning to environmental protection.
Article 15 The competent authorities of environmental protection and the tax authorities shall establish the sharing platform of information related to tax and the work coordination mechanism.
Conclusion by EHS.CN
Tax being levied by the tax authorities, pollutants being monitored and managed by the environmental protection authorities, and establishing the information sharing platform and work coordination mechanism, it will make sure that the tax will not less levied or evaded.
Since the fee has been modified into tax, the problem of the less-payment or evasion of tax will be exposed after the implementation of the Environmental Protection Tax Law. There is still one year of grace period before January 1, 2018. Where enterprises are involved in the problems of environmental protection tax or need to pay environmental protection tax, attention shall be paid to this significant change. Start to research the environmental protection tax, and achieve environment-friendly business and operating methods as soon as possible by upgrading technology, which is the best and more practical way. Otherwise, it may be eliminated by the times.