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Aug 2015, Issue 36

Will enterprises pay more for pollutant discharge with the Environmental Protection Tax Law?


During the third plenary session of the 18th Central Committee of the Communist Party of China (CPC) (the "Third Plenary Session"), it was proposed that the current pollutant discharge fee (PDF) be replaced by an environmental protection tax (EPT). With the aim to implement the statutory taxation principle, promote energy conservation and protect the industrial structure of the ecological environment, the Ministry of Finance, the State Administration of Taxation and the Ministry of Environmental Protection jointly drafted the “Environmental Protection Tax Law”, taking into account the opinions from relevant bodies. On 10 June 2015, the Legislative Affairs Office of the State Council released the "Environmental Protection Tax Law of the People’s Republic of China (Discussion Draft)" (the "EPT Law") and its interpretation to solicit public comments.

According to the EPT Law, the criteria and calculation method for EPT collection are basically similar to those stipulated in the prevailing PDF rule and regulations. Nevertheless, the major changes under the EPT framework are specific regulations regarding multiple levy, reduced levy and exemption treatment of EPT according to the degree of pollutants discharged. It is also stated in the EPT Law that taxpayers who have paid EPT are no longer liable to PDF.

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