The new Environmental Protection Tax Law was revealed on December 25, 2016, and is going to come into effect in the beginning of 2018. It will mainly replace the current pollution discharge fee by the Chinese government with a new environmental protection tax.
The new law is necessary, because, under the old law, many local governments in China have been put more focus on the economy growth on the costs of the environment. Some pollutant manufacturers were even allowed to pay fewer pollution fees when their contribution to the economy was big enough.
The new law is the first one of its kind in China, aiming to get successful actions against the growing pollution in the country and protect the environment from heavy pollution discharges of several industries. The key factor to convince enterprises establishing environmental friendly productions and discharge systems lays in a tax reduction for significant pollution reducing actions.
To be more precise, the tax allows a tax reduction of 25 percent, if the pollution discharge (mainly wastewater and air pollution) is 30 percent lower than the national or provincial standard for this pollution concentration. If the company is even able to keep its pollution 50 percent lower than the standard concentration, they can apply for a 50 percent tax reduction at all. So, the system clearly benefits environmental protection solutions of enterprises with lowering their costs. Besides air and water pollution, noise pollution will also be charged by taxes.
Furthermore, the new law seeks to standardise the governmental regulation on pollutant discharge, according to the market intelligence firm. It will also optimise the partly outdated industrial structure of several industries and helps to establish a more sustainable economic structure.
The vitamins industry is one of the heavily polluting industries, just beneath the chemicals, cement, and pharmaceutical industries. As a result, the environmental protection tax law will undoubtedly have a massive effect on the manufacturers in China and their efforts for a cleaner production.
With the implementation of the new law, China’s manufacturers will face stricter regulations, and these may threaten the regular businesses they are involved in. In the long term, the law may even push traditional producers with a lack of innovation and technological upgrades out of the competitive market.
The new law was passed by the Standing Committee of China’s National People’s Congress. The direct tax payment of pollutants makes them liable under the Chinese law and closes any loopholes that were previously taken advantage of by several companies. The new environmental protection tax will be calculated monthly and will need to be paid by the companies on a quarterly basis.
According to Reuters, the new tax rate will be RMB1.2 (US$0.17) per unit for the air pollution. For the water pollution, the tax will be RMB1.4 (US$0.20) per unit.