Finance Departments (Bureaus) of all provinces, autonomous regions, municipalities directly under the central government, and cities under separate planning; State Administration of Taxation; Offices of the Ministry of Finance’s Financial Inspectors stationed in all provinces, autonomous regions, municipalities directly under the central government, and cities under separate planning; Financial Bureau of the Xinjiang Production and Construction Corps:

To further promote the comprehensive utilization of resources and facilitate energy conservation and emission reduction, with the approval of the State Council, we have decided to adjust and refine the value-added tax policies for certain products that are comprehensively utilized as resources. At the same time, in order to standardize the identification and management of products that are comprehensively utilized as resources, it is necessary to consolidate the existing relevant policies. We hereby clarify and unify the value-added tax policies applicable to products related to comprehensive resource utilization and other products as follows:

I. The value-added tax exemption policy shall be applied to the sale of the following self-produced goods:

(1) Reclaimed water refers to water resources that are recovered from sources such as effluent from wastewater treatment plants, industrial discharge (including mine water), domestic sewage, and leachate (or filtrate) from waste disposal facilities. After undergoing appropriate treatment to meet certain water quality standards, this reclaimed water can be reused within a specified range. Reclaimed water shall comply with the relevant provisions of the Ministry of Water Resources’ “Reclaimed Water Quality Standards” (SL368—2006).

(2) Rubber powder produced exclusively from used tires as the sole raw material. The rubber powder shall meet the performance specifications stipulated in GB/T19208—2008.

(3) Retreaded tires shall meet the performance specifications stipulated in GB7037—2007, GB14646—2007, or HG/T3979—2007, and the carcass of retreaded tires must be 100% sourced from used tires.

(4) Specific construction material products in which the proportion of waste residues mixed into the production raw materials is no less than 30%.

Specific construction material products refer to bricks (excluding sintered common bricks), blocks, ceramic pellets, wall panels, pipes, concrete, mortar, road manhole covers, road guardrails, fire-resistant materials, refractory materials, thermal insulation materials, and mineral (rock) wool.

II. Value-added tax is exempted for sewage treatment services. Sewage treatment refers to the process of treating wastewater to meet the water quality standards specified in GB 18918—2002.

III. A policy of immediate refund of value-added tax will be implemented for the sale of the following self-produced goods:

(1) High-purity carbon dioxide products produced using industrial exhaust gases as raw materials. These high-purity carbon dioxide products shall comply with the relevant provisions of GB 10621—2006.

(2) Electricity or heat generated using waste as fuel. The proportion of waste used in generating electricity shall be no less than 80%, and the emissions produced shall meet the standards specified in GB 13223—2003, Phase I, or the relevant provisions of GB 18485—2001.
The term “waste” refers to municipal domestic waste, crop stalks, bark and waste residues, sludge, and medical waste.

(3) Shale oil produced from oil shale, a byproduct discarded during coal mining.

(4) Recycled asphalt concrete produced using waste asphalt concrete as a raw material. The proportion of waste asphalt concrete used in the production raw materials shall be no less than 30%.

(5) Cement (including cement clinker) produced using the rotary kiln process and containing a proportion of waste residues in the raw materials of no less than 30%.

1. For enterprises producing cement products using raw material calcination and clinker grinding processes, the formula for calculating the proportion of waste residue added is:

Proportion of waste residue added = (Quantity of waste residue added during raw material calcination + Quantity of waste residue added during clinker grinding) ÷ (Quantity of raw materials + Quantity of waste residue added during raw material calcination and clinker grinding + Quantity of other materials) × 100%

2. For enterprises that produce cement products by grinding purchased clinker, the formula for calculating the proportion of waste residue added is:

Proportion of waste residue added = Quantity of waste residue added during clinker grinding ÷ (Quantity of clinker + Quantity of waste residue added during clinker grinding + Quantity of other materials) × 100%

4. A 50% immediate refund policy will be implemented for the value-added tax generated from the sale of the following self-produced goods:

(1) Nitrocellulose powder produced from退役 military propellants as raw material. The proportion of退役 military propellants in the raw materials used for production shall not be less than 90%.

(2) By-products produced from desulfurization processes applied to flue gases generated by coal-fired power plants and various industrial enterprises, as well as high-sulfur natural gas. These by-products include gypsum (with a dihydrate calcium sulfate content of no less than 85%), sulfuric acid (with a concentration of no less than 15%), ammonium sulfate (with a total nitrogen content of no less than 18%), and sulfur.

(3) Steam, activated carbon, white carbon black, lactic acid, calcium lactate, and biogas produced using spent distiller’s grains and brewing boiler water as raw materials. The proportion of spent distiller’s grains and brewing boiler water in the raw materials used for production shall not be less than 80%.

(4) Electricity and heat generated using coal gangue, coal slime, stone coal, and oil shale as fuel. The proportion of coal gangue, coal slime, stone coal, and oil shale in the total fuel used for power generation shall not be less than 60%.

(5) Electricity generated by wind power.

(6) Certain new types of wall material products. The specific scope shall be in accordance with Annex 1 to this notice, “Catalog of New Wall Materials Eligible for Value-Added Tax Preferential Policies.”

5. A value-added tax (VAT) policy of collecting first and then refunding will be implemented for the sale of self-produced, comprehensively utilized biodiesel.

The comprehensive utilization of biodiesel refers to diesel fuel produced from waste animal and vegetable oils. The proportion of waste animal and vegetable oils used in the production raw materials shall not be less than 70%.

6. For solid clay bricks and tiles produced by general VAT taxpayers, VAT shall be levied at the applicable tax rate without exception; the simplified method of VAT collection shall not be adopted. As of July 1, 2008, cement (including cement clinker) produced using the vertical kiln process shall no longer be eligible for the immediate VAT refund policy stipulated in this notice.

7. Taxpayers applying for the value-added tax preferential policies for comprehensive resource utilization products as stipulated in Article 1, Article 3, Items 1 through 4 of Article 4, and Article 5 of this Notice shall, in accordance with the relevant provisions of the “Notice from the National Development and Reform Commission, the Ministry of Finance, and the State Administration of Taxation on Issuing the ‘Administrative Measures for the Recognition of Nationally Encouraged Comprehensive Resource Utilization’” (Fa Gai Huan Zi [2006] No. 1864), apply for and obtain the “Certificate of Recognition for Comprehensive Resource Utilization.” Otherwise, they shall not be eligible to apply for the value-added tax preferential policies.

8. The VAT exemption and immediate refund policies stipulated in this notice shall be handled by the tax authorities, while the policy of collecting VAT first and then refunding it shall be handled by the Fiscal Inspection Offices of the Ministry of Finance stationed in various localities and the relevant fiscal authorities, each according to the applicable current regulations.

9. The term “waste residues” as used in this notice refers to mining and ore-processing waste residues, smelting waste residues, chemical industry waste residues, and other types of waste residues. The specific scope of waste residues shall be governed by Annex 2, “Catalog of Waste Residues Eligible for Value-Added Tax Preferential Policies.”

The proportions of waste residue mixed in and the share of raw materials used relative to total production raw materials, as referred to in this notice, shall all be calculated by weight ratio and may not be calculated by volume.

10. The policies stipulated in Article 1 and Article 2 of this Notice shall take effect from January 1, 2009; the policies stipulated in Articles 3 through 5 shall take effect from July 1, 2008. The following documents are hereby repealed: “Notice of the Ministry of Finance and the State Administration of Taxation on Exempting Value-Added Tax on Certain Resource Products” (Cai Shui [1995] No. 44), “Notice of the Ministry of Finance and the State Administration of Taxation on Continuing to Implement Preferential Value-Added Tax Policies for Certain Comprehensive Utilization of Resources Products and Other Items” (Cai Shui [1996] No. 20), “Notice of the Ministry of Finance and the State Administration of Taxation on Issues Concerning the Value-Added Tax Policies for Certain Comprehensive Utilization of Resources and Other Products” (Cai Shui [2001] No. 198), “Supplementary Notice of the Ministry of Finance and the State Administration of Taxation on the Value-Added Tax Policies for Certain Comprehensive Utilization of Resources Products” (Cai Shui [2004] No. 25), “Reply of the State Administration of Taxation on the Collection of Value-Added Tax on Construction Materials” (Guo Shui Han [2003] No. 1151), “Reply of the State Administration of Taxation on the Application of the Value-Added Tax Policy for Comprehensive Utilization of Resources to Cement Clinker Produced from Waste Residues” (Guo Shui Han [2003] No. 1164), “Reply of the State Administration of Taxation on the Method for Calculating the Proportion of Waste Residues in Cement Produced by Enterprises Using Waste Residues” (Guo Shui Han [2004] No. 45), “Notice of the State Administration of Taxation on Clarifying the Scope of Construction Materials and Waste Residues Eligible for the Comprehensive Utilization of Resources Policy” (Guo Shui Han [2007] No. 446), and “Reply of the State Administration of Taxation on the Value-Added Tax Issues Related to the Production of Silver from Waste Liquids (Residues)” (Guo Shui Han [2008] No. 116).