The
Environmental Protection Tax Law (hereinafter referred to as “the Law”) became
effective on January 1, 2018, and is applicable to all enterprises which
discharge pollutants (air emissions, wastewater, solid wastes, and noise) to
the environment. The pollution discharge fees system will be replaced by the
environmental protection tax system after the Law becomes effective.
The Law
mainly consists of calculations on four categories: air emissions, wastewater,
solid wastes and noise. Detailed calculation measures are listed below:
A. Calculation of Environmental Protection Tax for Air Emissions
1. Tax
amount for pollutant = 1.2 (RMB) * pollutant discharge amount (kg) / unit
pollutant equivalent amount value (kg);
2. Unit
pollutant equivalent amount (air emissions) is determined by the Tables
attached with the Law, which also lists the taxable pollutants;
3. Rank
the taxable pollutants from each discharge outlet by unit pollutant equivalent
amount, and the top three pollutants shall be levied environmental protection
tax.
B. Calculation
of Environmental Protection Tax for Wastewater Discharge
1. Tax
amount for pollutant = 1.4 (RMB) * pollutant discharge amount (kg) / unit
pollutant equivalent amount (kg);
2. Unit
pollutant equivalent amount (water pollutants) is determined in the Tables
attached with the Law, which also lists the taxable pollutants;
3. Divide
the taxable pollutants into heavy metal pollutants and other pollutants. Rank
the taxable pollutants from each discharge outlet by unit pollutant equivalent
amount, and the top five heavy metal pollutants and top three other pollutants
shall be levied environmental protection tax.
C. Calculation
of Environmental Protection Tax for Solid Wastes
1. Tax
amount = applicable unit tax amount (RMB/ton) * solid wastes disposal amount
(ton);
2. Applicable
tax amount is determined by the Tables attached with the Law.
D. Calculation
of Environmental Protection Tax for Noise
1. Tax
amount of construction noise = 3 (RMB/m2) * building
area (m2)
2. Tax amount of boundary noise is determined by the decibels (dBs)
exceeding the regulatory limits, which is shown in the Tables attached with the
Law.
According to
the Law, pollutant discharge amount (wastewater and air emissions), solid
wastes disposal amount or boundary noise level is determined by the monitoring
data from qualified online monitoring devices or qualified monitoring
institutions. If the aforementioned determination methods are not able to be
applied, calculation methods (material balance or sampling) as determined by
administrative department of environmental protection are applicable.
The main
difference between the pollution discharge fees system and the environmental
protection tax system is that the tax amount will be influenced by the
environmental performance of a taxable enterprise. The main factors which
determine an enterprise’s pollution discharge expenditure (increase/remain the
same/decrease) are as follows:
A. In
the following cases, pollution discharge expenditure might increase after the
implementation of the Law.
1. Enterprises which directly discharge pollutants and which do not
hand over pollution discharge fees under current supervision system regularly.
2. Enterprises which have handed over pollution discharge fees but
which do not carry out the pollution discharge fees declaration appropriately.
For instance, the variety or quality of its declared pollution discharge is
lower than the actual situation.
B. In
the following cases, pollution discharge expenditure might decrease after the
implementation of the Law.
1. Enterprises equipped with a suitable
treatment system which decreases the pollutant to lower than 30%/50% of the
corresponding regulatory limits.
C. The
impact of the following factors on pollution discharge expenditure are not yet
certain and are to be noted along with its progress of implementation:
1. The Law grants local people's governments of provinces,
autonomous regions and municipalities the right to determine and adjust the
specific tax amounts applicable to taxable air pollutants and water pollutants,
by which the local environmental protection tax amount is anticipated to vary
per regional environmental condition.
2. It remains to be seen if the methods
employed to compute the taxable pollutant amount (such as the monitoring of
data reading frequency, the balancing of calculation principles in relation to
the applicability of materials) are sound and complete.
3. The Law does not cover environmental tax associated with VOCs
discharge, which is included in the pollution discharge fees system.
Given the
fact that this tax category has been transformed from the pollution discharge
fees system with its fee calculation framework adopted to the tax accounting,
and the fact the pollution discharge fee consists of a very low proportion of
tax liability to enterprises, any impact of this tax reform in the short term
is anticipated to be low.
However, the
environmental protection tax is mainly aimed at facilitating environmental
pollution reduction via economic leverage. The tax amount for enterprises of
different pollution severity is anticipated to be differentiated in the long
term to motivate environmental protection facility installation by the
enterprises for cost-benefit reasons, and to accelerate the elimination of
severe or excessive pollution enterprises.
Along with
the environmental protection tax law becoming effective, it is anticipated that
the accuracy and validity of calculation and enterprise declaration on
pollutant discharge will be strengthened. Meanwhile, the discretion of
local government for varying the unit tax amount, and the unspecified methods
of accounting for different industries or different pollutants are to be noted
by any related enterprise.
* The authors are from Golder
Associates. Golder Associates is an employee-owned international engineering and environmental
consultant with more than 7,000 staff located in more than 170 offices
worldwide. The Group provides specialist consulting services in environmental
science and engineering including Environmental Due Diligence (EDD), Phase I
and II Environmental Site Assessments (ESA), EHS audits, Environmental Impact
Assessments (EIA), Environmental Management Plans (EMP), EHS training, and the
design and implementation of environmental remediation plans. We have highly
experienced environmental engineers and scientists with worldwide project
experience, and have been actively working for a large number of multinational
companies in Asia and internationally for many years. In China, Golder
Associates has offices in Shanghai, Beijing, Hong Kong and Taiwan and employs
more than 70 EHS consultants with rich experiences in Chinese projects. Its offices in Shanghai and Hong Kong have operated for over 12 years.