Starting from 1 January 2018, China levies taxes on industrial emissions and pollution. The Environmental Protection Tax Law which got approved by the Standing Committee on 25 of December 2016 is part of China’s 13th Five-Year Plan, which considers environmental protection as one of its key goals.
The Environmental Protection Tax Law will affect the so-called “taxable pollutants” such as atmospheric pollutants, water pollutants, solid wastes and industrial noise. The “taxable pollutants” have been divided into different categories, which consist of subcategories with tax rates per measurable unit. The tax rates also differ depending on where the production takes place. For example, regions which are amongst the most polluted places, such as Beijing, Hebei, and Tianjin, have higher tax rates compared to less polluted places.
For example, the tax rates for atmospheric pollutants differ between 1.2 and 12 RMB per pollution equivalent, depending on the region. For water pollutants, the range is from 1.4 to 14 RMB. However, taxes on solid waste are the same in every region.
The tax rates for industrial noise fundamentally differ from the other categories as tax-rates increase drastically with the sound pressure level measured in decibel (dB). For example, the tax rate for 1-3 dB above standard is 350 RMB per month, whereas every noise that reaches at least 16 dB above standard will cost the emitter 11200 RMB per month (the original list in Chinese can be accessed here – the English translation is here).
The effects of the new law create additional costs for firms in China, but might also be an advantage for firms, which have already modernized their installations or offer cleaner alternatives.
As written in Art. 24 of the Environmental Protection Tax Law, government authorities at all levels are encouraged to devise policies and incentives that promote green investment and the use of monitoring equipment.
What can ECOVIS Beijing Tax Consultants do?
Our tax consultants can evaluate your situation and offer the following services:
- Tax Projection
- Tax Optimization Plan
- Application for Government Subsidies and Support
ECOVIS Beijing is a Sino-German consultancy focusing on accounting, audit, tax, legal, and FDI advisory. For more information or questions on withholding income tax in China or our tax services, please contact firstname.lastname@example.org
Richard Hoffmann is a partner at ECOVIS Beijing China. Richard obtained an honors degree in law and worked in Germany, the United States, and China for various prestigious law firms prior to joining ECOVIS. In addition to being a member of the board of ECOVIS International, he is Supervisor for the China business of a respected German company and shares his extensive knowledge to students by teaching commercial law in China at SRH Hochschule Heidelberg. He has published more than fifty articles in international magazines, frequently speaks at high profile events in China and abroad and is often invited as a legal expert by international TV stations. Contact: email@example.com
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