Presented by Brian Ho, EY
Sustainability Leader, Climate Change and Sustainability Services Director, Asia Pacific
China’s changing environmental regulations continue presenting challenges to business. Brian Ho of EY, a global leader in assurance, tax, transaction and advisory services, provided valuable insights for businesses on navigating the latest Environmental Protection Tax Law (effective January 2018).
China’s new Environmental Protection Tax Law
China’s strictest ever environmental protection law was implemented in January 1, 2015, followed by a series of accompanying regulations, such as Water, Atmospheric and Soil Pollution Prevention and Control Law, the Pollution Discharge License system, the Environmental Protection Tax Law and the Green Finance Implementation Method. The Environmental Protection Tax Law or came into effect on January 2018, with the first tax return period in April 2018.
One of the innovations of the new law was the transformation of pollutant discharge fees (PDF) into the environmental protection tax (EPT), calculated based on pollutant type and quantity, as well as factory region. The EPT applies to all enterprises and manufacturers directly discharging taxable pollutants (air, water, solid waste, and noise) to environment within the territory of mainland China (including land and sea areas). The new list of taxable items is more extensive than before, although a number of specific exemptions and preferential treatments apply.
The law also establishes the acceptable measuring methods of discharged pollutant, including:
The EPT is calculated on the monthly basis, with filing completed per quarter or per discharge. The agencies responsible for its administration and collection are local tax bureaus and the Environmental Protection Bureau.
Challenges facing businesses in maintaining environmental compliance
Navigating the Environmental Protection Tax
Ultimately, dealing with more compliance requirements translates to higher compliance related risks. In order to navigate the new system, businesses must have clear answers to the following questions:
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