Circular on Issues Relevant to Environmental Protection Tax

(Issued by the Ministry of Finance, the State Administration of Taxation and the Ministry of Ecology and Environment on March 30, 2018.)

Cai Shui [2018] No.23

Finance departments (bureaus), offices of the State Administration of Taxation, local taxation bureaus and environmental protection departments (bureaus) of the provinces, autonomous regions, municipalities directly under the central government and cities with independent development plans:

Pursuant to the PRC Environmental Protection Tax Law and the Implementing Regulations therefor, we hereby notify you on issues relevant to the levy of environmental protection tax as follows:

1 . The Issue on Monitoring and Calculation of the Quantity of Taxable Air Pollutant Emissions and Water Pollutant Discharges

Where a taxpayer has engaged a monitoring institution to monitor its taxable air pollutant emissions and water pollutant discharges and there are multiple monitoring figures for one pollutant at the same discharge outlet during the month in question, the quantity of the taxable air pollutant emitted shall be calculated based on the average of the monitoring figures; the quantity of the taxable water pollutant discharged shall be calculated based on the weighted average of the monitoring figures wherein the flow rate is assigned a weight. If there are no monitoring figures for the month in question during the monitoring period specified by the competent environmental protection department, the quantity of the taxable pollutant emitted/discharged may be calculated by using the most recent monitoring figures from a previous month. The methods of monitoring and calculating the quantity of a taxable pollutant emitted/discharged by a taxpayer in an industry subject to administration by pollutant discharge permit shall be handled in accordance with the requirements for administration by pollutant discharge permit.

If monitoring conditions are not satisfied due to the multiple types of pollutants discharged, or other such reason, the taxpayer shall calculate the quantity of taxable pollutants discharged in accordance with the Announcement on the Issuance of the Pollutant Discharge Coefficients and Material Balance Methods for the Calculation of the Quantity of Pollutants Discharged (Announcement of the former Ministry of Environmental Protection No.81 of 2017). Where the pollutant generation and discharge coefficients in the pollutant discharge coefficient method applicable in the relevant industry are interval values, the taxpayer shall, in light of its actual circumstances, determine the specific applicable pollutant generation and discharge coefficient values; a taxpayer in an industry subject to administration by pollutant discharge permit shall determine the same based on its pollutant discharge permit. Where the Ministry of Ecology and Environment has yet to determine the applicable pollutant discharge coefficients and material accounting method, a taxpayer shall, for the time being, refer to the pollutant discharge coefficients, material accounting methods and sampling methods on which it relied when paying the pollutant discharge fee to calculate the quantity of taxable pollutants discharged.

2 . The Issue on Calculation of the Pollution Equivalent Figure for a Taxable Water Pollutant

The pollution equivalent figure for a taxable water pollutant is calculated by dividing the quantity of the pollutant discharged by the pollution equivalent value for the pollutant in question. The pollution equivalent figure for color is calculated by multiplying the quantity of the water pollutant discharged by the color excess multiple and then dividing the product by the applicable pollution equivalent value. The pollution equivalent figure for water pollutants from the livestock and poultry breeding industry is calculated by dividing the monthly average stock quantity of the livestock or poultry farm by the applicable pollution equivalent value. The monthly average stock quantity of a livestock or poultry farm is calculated based on the average of the stock quantity at the beginning of the month and the stock quantity at the end of the month.

3 . The Issue on Calculation of the Quantity of Taxable Solid Waste Discharged and Tax Filing

The quantity of taxable solid waste discharged is the remainder derived from subtracting the quantities of stored, disposed of and comprehensively utilized taxable solid waste for the period in question from the quantity of taxable solid waste generated during the period in question. The taxpayer shall accurately measure the quantities of taxable solid waste stored, disposed of and comprehensively utilized, and if it fails to do so, it may not subtract the same from the quantity of taxable solid waste generated. If a taxpayer transfers taxable solid waste to another entity or individual for storage, disposal or comprehensive utilization in accordance with the law, the quantity of solid waste transferred shall be counted accordingly as part of its quantity of taxable solid waste stored, disposed of or comprehensively utilized for the period in question. The quantity of transferred taxable solid waste accepted by a taxpayer shall not be counted as part of the quantity of taxable solid waste generated by it during the period in question. Where a taxpayer comprehensively utilizes taxable solid waste, such utilization shall comply with the assessment and management specifications for comprehensive utilization of industrial solid waste formulated by the Ministry of Industry and Information Technology.

When a taxpayer makes a tax filing and pays tax, it shall submit to the tax authority the quantities of taxable solid waste generated, stored, disposed of and comprehensively utilized and additionally submit tax information showing the direction of flow and the quantity of solid waste, including solid waste disposal and utilization entrustment contracts, proof of the qualifications of the entrusted parties, copies of the solid waste transfer forms and photocopies of the hazardous waste management ledgers. If the relevant tax information has been collected on a form for collection of basic environmental protection tax information and has remained unchanged, the taxpayer shall not be required to submit the same again. A taxpayer shall keep other taxable solid waste management ledgers by making reference to hazardous waste ledger management requirements, truthfully document information such as the type, quantity and direction of flow of solid waste generated, as well as information on storage, disposal, comprehensive utilization, acceptance of transfer, etc., and shall retain taxable solid waste management ledgers and relevant information for future reference.

4 . The Issue on Calculation of Tax Payable on Taxable Noise

The tax payable on taxable noise is the specific applicable tax amount corresponding to the number of decibels by which the state specified standard is exceeded. Where an excessive decibel is not a whole number, it shall be rounded to the nearest whole. If one monitoring point of an entity has multiple monitoring figures that exceed the standard during the month in question, the tax payable shall be calculated based on the highest excessive sound level. If the number of days on which the standard is exceeded during the daytime from a sound source is less than 15 in the aggregate in one month, or the number of nights is less than 15 nights in the aggregate, the taxable amount shall be calculated at half the figure.