Law of the People's Republic of China on Environmental Protection Tax

Order of the President of the People's Republic of China No.61

December 25, 2016

The Law of the People's Republic of China on Environmental Protection Tax, adopted at the 25th Session of the Standing Committee of the 12th National People's Congress of the People's Republic of China on December 25, 2016, is hereby issued for implementation on January 1, 2018.

Xi Jinping, president of the People's Republic of China

Law of the People's Republic of China on Environmental Protection Tax

(Adopted at the 25th Session of the 12th Standing Committee of the National People's Congress on December 25, 2016)

Contents
Chapter I General Provisions
Chapter II Tax Basis and Amount Payable
Chapter III Tax Deduction and Exemption
Chapter IV Administration of Tax Collection
Chapter V Supplementary Provisions

Chapter I General Provisions

Article 1 The Law of the People's Republic of China on Environmental Protection Tax (this "Law") is formulated for the purpose of protecting and improving the environment, reducing pollutant emissions, and promoting the construction of ecological civilization.

Article 2 Enterprises, entities, other producers and operators that directly emit taxable pollutants into the environment within the territory and other sea areas under the jurisdiction of the People's Republic of China are taxpayers of environmental protection tax, who shall pay tax in accordance with this Law.

Article 3 For the purpose of this Law, taxable pollutants refer to air and water pollutants, solid waste and noise specified in the Table of Taxable Items and Amount of Environmental Protection Tax and the Table of Taxable Pollutants and Equivalent Values attached hereto.

Article 4 In any of the following circumstances, which are not circumstances of direct emission of pollutants into the environment, the environmental protection tax shall not be paid for corresponding pollutants:
1. Enterprises, entities, other producers and operators that directly emit taxable pollutants into the centralized sewage and domestic waste treatment facilities established by law; or
2. Enterprises, entities, other producers and operators that store or dispose of solid wastes in facilities or places that meet the national or local standard of environmental protection.

Article 5 Where lawfully established centralized urban sewage and domestic waste treatment facilities emit taxable pollutants into the environment exceeding the limit prescribed by the national or local standard, they shall pay environmental protection tax.
Where the solid wastes stored or disposed of by enterprises, entities and other producers and operators are not in compliance with the national or local standard of environmental protection, they shall pay environmental protection tax.

Article 6 For taxable items and the amount of environmental protection tax, the Table of Taxable Items and Amount of Environmental Protection Tax attached to this Law shall be followed.
People's governments at the levels of province, autonomous region and municipality directly under the Central Government may raise the determination of and adjustment to the applicable tax amount of the taxable air and water pollutants within the tax amount range set out in the Table of Taxable Items and Amount of Environmental Protection Tax by taking their specific environmental capacity, status quo of pollutant emission, and economic, social and ecological development goals into account. They shall submit the determined and adjusted amount to the Standing Committee of the People's Congress at the corresponding level for approval, and to the Standing Committee of the National People's Congress and the State Council for filing.

Chapter II Tax Basis and Amount Payable

Article 7 The tax basis of taxable pollutants shall be determined as per the following methods:
1. Taxable air pollutants shall be determined by the pollution equivalent number converted from the pollutant emission amount;
2. Taxable water pollutants shall be determined by the pollution equivalent number converted from the pollutant emission amount;
3. Taxable solid waste shall be determined by the solid waste emission amount; and
4. Taxable noise shall be determined by the decibels in excess of the national standard.

Article 8 The pollution equivalent number of taxable air and water pollutants shall be the emission amount of the pollutants divided by the pollution equivalent value of each pollutant. For the specific pollution equivalent value of each type of taxable air and water pollutant, the provisions in the Table of Taxable Items and Amount of Environmental Protection Tax attached to this Law shall be observed.

Article 9 For taxable air pollutants in each emission outlet or without an emission outlet, the top 3 pollutants as ranked by pollution equivalent number in descending order shall be subject to environmental protection tax.
Taxable water pollutants in each emission outlet shall be classified into water pollutants of the first class and pollutants of other classes according to the Table of Taxable Pollutants and Equivalent Values attached hereto. The top 5 water pollutants among the water pollutants of the first class and top 3 pollutants among pollutants of other classes as ranked by pollution equivalent number in descending order shall be subject to environmental protection tax.
People's governments at the levels of province, autonomous region and municipality directly under the Central Government may add more varieties of taxable pollutants subject to environmental protection tax in the same emission outlet based on their specific need for reduction of pollutant emissions and shall submit the added varieties to the Standing Committee of the People's Congress at the corresponding level for approval, and to the Standing Committee of the National People's Congress and the State Council for filing.

Article 10 The emission amount of taxable air and water pollutants, solid waste and the decibels of noise shall be calculated using the following methods and orders:
1. Where the taxpayer installs and uses an automatic pollutant monitoring instrument in conformity with the national provisions and monitoring standards, the emission amount shall be calculated as per the pollutant automatic monitoring data;
2. Where the taxpayer does not install or use a pollutant automatic monitor, the emission amount shall be calculated as per the pollutant monitoring data in conformity with the national provisions and monitoring standards presented by a monitoring agency;
3. Where the conditions for monitoring pollutant emissions are absent due to such reasons as excessive varieties of pollutants, the emission amount shall be calculated as per the pollutant emission coefficients and material balance method provided by the competent environmental protection authority of the State Council; and
4. Where calculation as per Paragraph 1, 2 or 3 hereof is not feasible, the emission amount shall be calculated as per the sampling-based measuring method provided by the competent environmental protection authority of the local people's government at or above the level of province, autonomous region or municipality directly under the Central Government.

Article 11 The taxable amount of environmental protection tax shall be calculated as per the following methods:
1. The taxable amount of air pollutants shall be the pollution equivalent number multiplied by the specific applicable tax;
2. The taxable amount of taxable water pollutants shall be the pollution equivalent number multiplied by the specific applicable tax;
3. The taxable amount of taxable solid waste shall be the solid waste emission amount multiplied by the specific applicable tax; and
4. The taxable amount of taxable noise shall be the specific applicable tax corresponding to the decibels in excess of the national standard.

Chapter III Tax Deduction and Exemption

Article 12 Environmental protection tax shall be temporarily exempted under any of the following circumstances:
1. Taxable pollutants emitted from agricultural production (excluding scale-intensive farming);
2. Taxable pollutants emitted by such mobile sources as motor vehicles, locomotives, non-road mobile machinery, ships, and aircraft;
3. Taxable pollutants emitted from lawfully established centralized urban sewage and domestic waste treatment facilities without exceeding the national or local standard;
4. Solid waste comprehensively utilized by the taxpayer in line with the national or local standard of environmental protection; and
5. Other tax-exempt circumstances approved by the State Council.
Any tax-exempt circumstances as provided in the forgoing Paragraph 5 shall be submitted by the State Council to the Standing Committee of the National People's Congress for filing.

Article 13 Where the concentration value of taxable air or water pollutants emitted by the taxpayer is 30% or much lower than the national or local standard, environmental protection tax shall be collected by 75%. Where the concentration value of taxable air or water pollutants emitted by the taxpayer is 50% or much lower than the national or local standard, environmental protection tax shall be collected by 50%.

Chapter IV Administration of Tax Collection

Article 14 The collection of environmental protection tax shall be administered by the tax authority in accordance with the Law of the People's Republic of China on the Administration of Tax Collection and relevant provisions of this Law.
Pollutant monitoring shall be administered by the competent environmental protection authority in accordance with this Law and other relevant laws and regulations on environmental protection.
Local people's governments at the county level or above shall establish a mechanism whereby the tax authority, the competent environmental protection authority and other relevant departments work in cooperation with due division of work, so as to better administer the collection of environmental protection tax and ensure that tax due is channeled to the treasury in full amount and on time.

Article 15 The competent environmental protection authority and the tax authority shall establish a platform for tax-related information sharing and a work coordination mechanism.
The competent environmental protection authority shall regularly deliver environmental protection-related information on pollutant emitters, such as emission permit, pollutant emission data, illegal acts in environmental protection and administrative penalties, to the tax authority.
The tax authority shall regularly deliver environmental tax-related information on the taxpayer, such as tax return, tax due to the treasury, tax deductions and exemptions, tax arrears, and risks or doubts, to the competent environmental protection authority.

Article 16 The tax obligation arises on the day the taxpayer emits taxable pollutants.

Article 17 Taxpayers shall file the declaration form of environmental protection tax with the tax authority that has jurisdiction over the place where the taxable pollutants are emitted.

Article 18 Environmental protection tax shall be calculated on a monthly basis, and declared and paid on a quarterly basis. Tax that cannot be calculated and paid by the fixed deadline can be declared and paid each time.
When declaring and paying environmental protection tax, a taxpayer shall submit to the tax authority concerned the varieties and amounts of taxable pollutants emitted, the concentration values of air and water pollutants, as well as other taxation materials required by the tax authority as per actual demands.

Article 19 Where declaring and paying environmental protection tax on a quarterly basis, a taxpayer shall do so with the tax authority concerned within 15 days after the end of a quarter. Where declaring and paying environmental protection tax each time, a taxpayer shall do so with the tax authority concerned within 15 days after the date of arising of their tax obligation.
Taxpayers shall file their tax declaration truthfully and lawfully, and be held responsible for the authenticity and integrity of such declaration.

Article 20 The tax authority shall compare taxpayers' data of tax declaration with the relevant data delivered by the competent environmental protection authority.
When any abnormality in a taxpayer's tax declaration data or any failure to file the declaration within the prescribed period is discovered, the tax authority may submit it to the competent environmental protection authority for review. The environmental protection authority shall present its review comments to the tax authority within 15 days upon receipt of such data from the tax authority. The tax authority shall adjust the taxable amount of the taxpayer based on the data reviewed by the environmental protection authority.

Article 21 Where the pollutant emission amount is calculated in accordance with Paragraph 4 of Article 10 of this Law, the tax authority shall work with the competent environmental protection authority to determine the type and amount of emitted pollutants and the taxable amount.

Article 22 Where a taxpayer who engages in marine engineering emits taxable air and water pollutants and solid waste into sea areas under the jurisdiction of the People's Republic of China, the competent tax authority of the State Council shall work with the competent marine affairs authority of the State Council to provide specific measures for the declaration and payment of environmental protection tax.

Article 23 Where the taxpayer and the tax authority, the competent environmental protection authority and their staff violate this Law, they shall be held legally responsible in accordance with the Law of the People's Republic of China on the Administration of Tax Collection, Law of the People's Republic of China on Environmental Protection and other relevant laws and regulations.

Article 24 The people's governments at all levels shall encourage taxpayers to intensify their investment in environmental protection construction, and provide fund and policy supports for their investment in automatic pollutant monitoring equipment.

Chapter V Supplementary Provisions

Article 25 For the purpose of this Law, the following terms are defined as follows:
1. "Pollution equivalent" refers to a comprehensive index or unit of measurement used for evaluating the environmental pollution of various pollutants in light of the level of harm to the environment by pollutants or pollutant emitting activities and the technical economy of treatment. Different pollutants with the same pollution equivalent in the same medium have basically the same level of pollution.
2. "Pollutant emission coefficient" refers to the statistical average amount of pollutants that are emitted by the producer's products under normal technological, economical and managerial conditions.
3. "Material balance" refers to a method to calculate the raw materials used during production, the products produced and the waste arising from the production according to the law of conservation of mass.

Article 26 The enterprises, entities, other producers and operators that directly emit taxable pollutants into the environment shall, in addition to paying environmental protection tax, be liable for the damage arising therefrom in accordance with the law.

Article 27 From the day when this Law takes effect, environmental protection tax shall be collected as stipulated by this Law, and the pollutant emission fee shall no longer apply.

Article 28 This Law shall become effective as of January 1, 2018.