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The implementation of the Law of Environmental Protection Tax is one of the most important policy changes in China to occur within the last several years and certainly a legislative highlight at the beginning of 2018. The preparation for implementation has been underway for over a year and a lot of local governments have already carried out their own tax levels. Along with the Law, the implementation rules of the Law which were published in late 2017 took effect on the same day and specified some definitions and requirements that were raised by the Law. ChemLinked summarized some key questions that the implementation rules tried to answer as follows.
1. The calculation of the taxable amount of the solid wastes (mentioned in the Article 7 Paragraph 3 of the Law).
Unlike air and water pollutants, the authorities didn’t set up the pollutant equivalents for the calculation of the solid wastes. So the calculation of the emission amount of the solid wastes follows the material balance: [emission amount] = [generation amount] – [storage amount] – [treatment amount] – [recycle amount].
2. Criteria for violations and corresponding punitive measures.
The total amount of air or water pollutants will be regarded as the emission amount for punitive purposes. Taxpayers will be punished under the following circumstances:
The taxpaer don't install the automatic pollution monitor equipment as required, or
The monitoring equipment doesn’t connect to the monitor network of the environmental protection authorities, or
The monitor equipment is damaged, moved or altered arbitrarily, or
The taxpayer tampers or forges the monitor data, or
The taxpayer emit by illegal methods, or
The taxpayer declare false taxable emission amount.
Similarly, the total amount of solid wastes generated will be regarded as the emission amount for punitive purposes under the following circumstances:
The taxpayer emit by illegal methods, or
The taxpayer declare false taxable emission amount.
3. The calculation of the emission concentration of the air and water pollutants (mentioned in the Article 13 of the Law).
The emission concentration of the air and water pollutants in that month should be the monthly average of the hourly average values that are recorded by the automatic monitor equipment installed by the taxpayer; or the average value of the concentration recorded by the supervision authorities.
It should be noted that only when both of the above conditions are met will a taxpayer be eligible to avail of any tax reductions (the tax reduction criteria could be seen here) and the concentration should be calculated separately for each air and water pollutants.
4. The definition of “other solid wastes” (mentioned in the appendix table of the Law).
The term “other solid wastes” was paralleled with “coal gangue”, “tailings”, “hazardous wastes”, “smelt residue”, “slags”, etc. in the Law and the expression was relatively vague. The implementation rules stipulated that the scope and contents of the “other solid wastes” should be decided based on the practical demands in environmental protection by the local provincial governments or the governments of the municipalities directly under the central government. The decision should be approved by the Standing Committee of People’s Congress at the same administrative level and filed to the Standing Committee of National People’s Congress and the State Council.
5. The division of work among the tax authorities, environmental protection authorities, and the local governments.
The tax authorities are responsible for acceptance and review of the tax declaration, tax information check, and receiving the tax income.
The environmental protection authorities are responsible for the monitor of the taxable pollutants, and carrying out and improving the regulations on the pollution monitor.
The local governments above the county level are responsible for the management of the levy and the coordination of different departments.
6. The Regulations on the Administration of the Pollutants Emission Fee published by the State Council on Jan 2nd, 2003 was abolished from Jan 1st, 2018.
The implementation rules are the first supportive regulation to the Law of Environmental Protection Tax, however China’s Environmental Protection Tax system still needs perfection. The Ministry of Environmental Protection (MEP) and the State Administration of Taxation (SAT) are now developing a series of supportive documents specifying and detailing the implementation of the Law, including the tax information sharing platform between the tax authorities and the environmental protection authorities, the determination of the pollutant equivalents, and the calculation methods of the material balance, etc.
