Implementing Regulations for the PRC Environmental Protection Tax Law

(Promulgated by the State Council on December 25, 2017 and effective as of January 1, 2018.)

Order of the State Council No.693

Part One: General Provisions

Article 1: These Regulations have been formulated pursuant to the PRC Environmental Protection Tax Law (the Tax Law).

Article 2: The specific scope of other solid waste mentioned in the Table of Tax Items and Tax Amounts for Environmental Protection Tax attached to the Tax Law shall be determined by the procedure described in the second paragraph of Article 6 of the Tax Law.

Article 3: For the purposes of the first paragraph of Article 5 and Item (3) of the first paragraph of Article 12 of the Tax Law, the term “urban or rural sewage collection and treatment plant” means a site that provides domestic sewage treatment services to the public, and excludes sites that provide sewage treatment services for enterprises, public institutions and other producers/operators in areas where industries are concentrated, such as industrial parks and development zones, and excludes sewage treatment plants constructed and used by enterprises, public institutions and other producers/operators themselves.

Article 4: Poultry and livestock farms that reach a scale specified by the provincial-level people's government and have pollutant discharge outlets shall pay environmental protection tax in accordance with the law. Waste from poultry or livestock breeding that is recycled or treated to make it harmless in accordance with the law does not fall into the category of directly discharging pollutants into the environment, and environmental protection tax is not payable in respect thereof.

Part Two: Tax Base

Article 5: The tax base for taxable solid waste shall be determined based on the quantity of solid waste discharged. The quantity of solid waste discharged shall be the balance derived from subtracting the quantity of taxable solid waste stored, disposed of and recycled during the period in question from the quantity of taxable solid waste generated during the period in question.

The quantity of solid waste stored and disposed of specified in the preceding paragraph means the quantity of solid waste stored or disposed of in/with facilities or a site complying with state and local environmental protection standards. The quantity of solid waste recycled means the quantity of solid waste recycled in accordance with the resource recycling requirements of the State Council departments in charge of development and reform, and industry and information, and state and local environmental protection standards.

Article 6: The quantity of taxable solid waste generated by a taxpayer during the period in question shall serve as the quantity of solid waste discharged by it if:

(1) it has illegally dumped taxable solid waste; or

(2) it has made a fraudulent tax filing.

Article 7: The tax base for taxable air pollutants and water pollutants shall be determined based on the quantity of discharged pollutant translated into the pollution equivalent figure.

The quantity of taxable air pollutants or water pollutants generated by a taxpayer during the period in question shall serve as the quantity of pollutants discharged by it if:

(1) it has failed to install and use automatic pollutant monitoring equipment in accordance with the law or failed to link its automatic pollutant monitoring equipment to the monitoring equipment of the competent environmental protection department;

(2) it has damaged, or it has moved or modified without authorization, the automatic pollutant monitoring equipment;

(3) it has altered or forged pollutant monitoring data;

(4) it has discharged taxable pollutants in a manner that runs counter to the law, such as discharging them through concealed pipes, a leaching well, seepage pit, perfusion or dilution or operating pollutant prevention and treatment equipment in a manner that is adnormal; or

(5) it has made a fraudulent tax filing.

Article 8: If taxable pollutants are discharged from two or more discharge outlets, the environmental protection tax shall be calculated for, and levied on, the taxable pollutants discharged from each discharge outlet separately. If a taxpayer possesses a pollutant discharge permit, its pollutant discharge outlet shall be determined based on the pollutant discharge outlet indicated on its permit.

Article 9: With respect to a taxpayer to whom the circumstance set forth in Item (2) of Article 10 of the Tax Law applies, if the monitoring data obtained from the monitoring of pollutants that it itself conducts complies with relevant state provisions and monitoring specifications, the same shall be deemed equivalent to monitoring data issued by a monitoring institution as specified in Item (2) of Article 10 of the Tax Law.

Part Three: Reduction and Exemption of Tax

Article 10: For the purposes of Article 13 of the Tax Law, the term “concentration of a taxable air pollutant or water pollutant” means the figure derived from re-averaging the hourly average value of the concentration of taxable air pollutants or the figure derived from re-averaging the daily average value of the concentration of taxable water pollutants automatically measured for the month in question by the automatic pollutant monitoring equipment installed and used by the taxpayer, or the average value of the concentration of taxable air pollutants or water pollutants measured during the month in question by a monitoring institution.

Where the environmental protection tax is levied at a reduced rate in accordance with Article 13 of the Tax Law, the hourly average value of the concentration of taxable air pollutants or daily average value of the concentration of taxable water pollutants specified in the preceding paragraph, and the concentration of taxable air pollutants or water pollutants measured each time during the month in question by the monitoring institution may not exceed the pollutant discharge standards specified by the state or local area.

Article 11: Where the environmental protection tax is levied at a reduced rate in accordance with Article 13 of the Tax Law, each of the different taxable pollutants discharged from each discharge outlet shall be calculated separately.

Part Four: Levy Administration

Article 12: A tax authority shall perform duties such as acceptance of environmental protection tax filings, comparison of tax-related information and arranging for the payment of tax proceeds into the treasury in accordance with the law.

The competent environmental protection department shall be responsible, in accordance with the law, for administration of the monitoring of taxable pollutants, and formulating and improving pollutant monitoring specifications.

Article 13: Local people's governments at the county level or above shall strengthen its direction of the levy administration of environmental protection tax, and coordinate and solve major issues arising in the course of the levy administration of environmental protection tax in a timely manner.

Article 14: The State Council departments in charge of tax and environmental protection shall formulate the technical standards for the tax-related information sharing platform and the specifications for the collection, storage, transmission, searching and use of data.

Article 15: The competent environmental protection department shall send the following information obtained in the course of environmental protection oversight to the tax authority through the tax-related information sharing platform:

(1) basic particulars such as the names and unified social integrity codes of pollutant discharging entities, their pollutant discharge outlets and the types of pollutants discharged by them;

(2) the pollutant discharge data (including data such as the quantities of pollutants discharged and the concentration of air pollutants and water pollutants) of pollutant discharging entities;

(3) details of environment-related violations of the law by, and administrative penalties imposed on, pollutant discharging entities;

(4) review opinions on the irregularities in taxpayers' tax filing data and information or failures by taxpayers to carry out tax filings by the prescribed deadlines submitted by the tax authority for review; and

(5) other information to be sent to the tax authority as determined through consultations.

Article 16: The tax authority shall send the following environmental protection tax-related information to the competent environmental protection department through the tax-related information sharing platform:

(1) the basic particulars of taxpayers;

(2) tax filing information;

(3) information on the paying of tax proceeds into the treasury, tax reductions and exemptions, taxes owed and risk concerns;

(4) details of tax-related violations of the law by, and administrative penalties imposed on, taxpayers;

(5) information on irregularities in the tax filing data and information of taxpayers or failures by taxpayers to carry out tax filings by the prescribed deadlines; and

(6) other information to be sent to the competent environmental protection department as determined through consultations.

Article 17: For the purposes of Article 17 of the Tax Law, the term “place where the taxable pollutant is discharged” means:

(1) the place where a discharge outlet for taxable air pollutants or water pollutants is located;

(2) the place where taxable solid waste is generated; or

(3) the place where taxable noise is generated.

Article 18: If a taxpayer cross-regionally discharges taxable pollutants and there is a dispute between tax authorities over the tax levy jurisdiction, the parties to the dispute shall resolve it through consultations in accordance with the principle of benefitting levy administration. If they are unable to reach a consensus through consultations, they shall refer the dispute to their common higher level tax authority for a decision.

Article 19: A tax authority shall carry out taxpayer identification based on the information on pollutant discharging entities sent by the competent environmental protection department.

If, in the information on pollutant discharging entities sent by the competent environmental protection department, there is no taxpayer with corresponding information, the tax authority shall carry out taxpayer identification when the taxpayer carries out an environmental protection tax filing for the first time and send the relevant information to the competent environmental protection department.

Article 20: If the competent environmental protection department discovers an error in the taxable pollutant discharge information filed by a taxpayer or in the applicable pollutant discharge coefficient or the material balance method, it shall notify the tax authority to handle the matter.

Article 21: In the event of a discrepancy between the pollutant discharge data filed by a taxpayer and the related data sent by the competent environmental protection department, the tax base for the taxable pollutants shall be determined based on the data sent by the competent environmental protection department.

Article 22: For the purposes of the second paragraph of Article 20 of the Tax Law, the term “irregularities in the taxpayer's tax filing data and information” includes but is not limited to the following:

(1) the quantity of taxable pollutants discharged as reported by the taxpayer for the period in question being markedly less than that for the same period in the previous year, and there is no legitimate reason therefor; and

(2) the taxpayer's quantity of pollutants discharged per unit of product being markedly less than that of similar taxpayers, and there is no legitimate reason therefor.

Article 23: Tax authorities and competent environmental protection authorities shall provide guidance, training and advisory services relating to the payment of environmental protection tax to taxpayers without consideration.

Article 24: When a tax authority conducts an environmental protection tax-related tax inspection in accordance with the law, the competent environmental protection department shall offer its cooperation.

Article 25: A taxpayer shall duly keep information relating to taxable pollutant monitoring and administration in accordance with provisions on the levy administration of taxes.

Part Five: Supplementary Provisions

Article 26: These Regulations shall be effective as of January 1, 2018. The Regulations for the Administration of the Collection and Use of Pollutant Discharge Fees promulgated by the State Council on January 2, 2003 shall be repealed simultaneously.