The Chinese government has decided to introduce a new environmental protection tax (EPT) which will replace the existing pollutant discharge fee (PDF) and will allow for a better taxation principle in this area. The law has been drafted and released in order to solicit public comments. Our lawyers in China can tell you how this new law will affect you and what new tax obligations you will have to observe in China.
The calculation method for the environmental protection tax
According to the project of the environmental protection tax law, the calculation method for the EPT will be similar to that used for the PDF. The payable fee will be determined in accordance with the volume of the pollutants discharged by a company, multiplied by a specific tax amount. The tax base is different for each pollutant:
- air and water pollutants;
- solid waste;
- construction noise;
- industrial noise.
The law also described certain situations in which EPT exemptions can apply:
- pollutants from agricultural production;
- pollutants from transportation machinery;
- pollutants from urban sewage and household waste treatment plants.
EPT tax payment
Taxpayers will need to observe the tax filing obligations at the local tax authorities from the area where the pollutants are discharged. The tax obligations commenced on the date on which the company/taxpayer begins to discharge waste and/or pollutants.
The environmental protection tax will be levied monthly, quarterly or yearly, as it will be determined by the tax authorities, depending on specific conditions. The tax must be paid within 15 days after the filing is due. Failure to pay the EPT tax will be punishable according to the legal provisions.
The experts at our law firm in China can help you calculate the amount of due taxes, according to the industry you work in and the pollution category it falls into. Taxpayers who were accustomed to the PDF will not experience a significant increase in the tax burden once the new law is approved.