2017 Year 12 Moon 25 On [date], Premier Li Keqiang of the State Council signed a State Council decree promulgating the “Implementation Regulations of the Environmental Protection Tax Law of the People’s Republic of China” (hereinafter referred to as the “Implementation Regulations”), effective from [date]. 2018 Year 1 Moon 1 Effective as of the date of issuance. Recently, officials from the Legislative Affairs Office of the State Council, the Ministry of Finance, the State Administration of Taxation, and the Ministry of Environmental Protection answered reporters’ questions regarding issues related to the implementation regulations.

　　 Q: What is the background behind the formulation and implementation of the regulations?

　　Answer: 2016 Year 12 Moon 25 At the 25th Session of the Standing Committee of the 12th National People's Congress, the “Environmental Protection Tax Law of the People’s Republic of China” (hereinafter referred to as the Environmental Protection Tax Law) was adopted and will take effect from... 2018 Year 1 Moon 1 Effective from the date of promulgation. The enactment of the Environmental Protection Tax Law is a concrete implementation of the proposals put forward at the Third and Fourth Plenary Sessions of the 18th Central Committee of the Party. “ Promote the shift from environmental protection fees to taxes. ”、 “ Protect the ecological environment with a rigorous legal system. ” The major measures required are of great significance for protecting and improving the environment, reducing pollutant emissions, and promoting the construction of an ecological civilization. To ensure the smooth implementation of the Environmental Protection Tax Law, it is necessary to formulate implementing regulations that refine the relevant provisions of the law, further clarify boundaries, and enhance its operability.

　　 Q: In what aspects did the Implementation Regulations provide further details on the Environmental Protection Tax Law?

　　Answer: Within the framework of the Environmental Protection Tax Law, the Implementation Regulations focus on refining specific provisions regarding taxable objects, tax bases, tax exemptions and reductions, and tax administration, thereby better meeting the practical needs of environmental protection tax collection.

　　 Q: What specific provisions does the Implementation Regulation make regarding the objects subject to taxation?

　　Answer: There are three main aspects: First, the specific scope of “other solid wastes” referred to in the “Table of Tax Items and Rates for the Environmental Protection Tax” shall be determined in accordance with the procedures stipulated in Article 6, Paragraph 2 of the Environmental Protection Tax Law—namely, proposed by the people's governments of provinces, autonomous regions, and municipalities directly under the central government, submitted to the standing committees of the people's congresses at the same level for decision, and reported to the Standing Committee of the National People's Congress and the State Council for record. Second, it clarifies... “ Urban and rural wastewater centralized treatment facilities established in accordance with the law ” The scope. According to the Environmental Protection Tax Law, urban and rural centralized wastewater treatment facilities established in accordance with the law that discharge taxable pollutants exceeding emission standards shall pay the environmental protection tax; those that discharge taxable pollutants not exceeding the emission standards shall be temporarily exempted from paying the environmental protection tax. To clarify the specific entities subject to this provision, the implementing regulations stipulate that urban and rural centralized wastewater treatment facilities established in accordance with the law refer to facilities providing domestic wastewater treatment services to the general public, but do not include facilities providing wastewater treatment services to enterprises, institutions, and other producers and operators located within industrial parks, development zones, and other industrial clusters, nor do they include wastewater treatment facilities built and operated by enterprises, institutions, and other producers and operators for their own use. Third, the regulations clearly define issues related to the payment of the environmental protection tax by large-scale livestock and poultry farms: livestock and poultry farms meeting the scale standards set by the provincial people's governments and equipped with pollutant discharge outlets shall pay the environmental protection tax in accordance with the law. Where livestock and poultry breeding waste is comprehensively utilized and rendered harmless in compliance with the law, such activities are not considered direct discharge of pollutants into the environment and are therefore exempt from paying the environmental protection tax.

　　 Q: How is the tax base for the environmental protection tax determined? What specific issues have been further clarified in the implementing regulations in this regard?

　　Answer: According to the Environmental Protection Tax Law, the tax base for taxable atmospheric pollutants and water pollutants is determined by the pollution equivalent number calculated based on the amount of pollutant emissions. The tax base for taxable solid wastes is determined by the amount of solid waste discharged. For taxable noise, the tax base is determined by the number of decibels exceeding the national standards. Based on actual conditions and needs, the Implementation Regulations further clarify two issues concerning the tax base: First, considering that storing or disposing of solid wastes in facilities or sites that comply with national and local environmental protection standards does not constitute direct discharge of pollutants into the environment and thus is exempt from environmental protection tax, and given that the comprehensive utilization of solid wastes in accordance with the law is temporarily exempted from the environmental protection tax, the Implementation Regulations stipulate that the amount of solid waste discharged shall be the balance obtained by subtracting the amount of solid waste stored, disposed of, or comprehensively utilized during the current period from the amount of taxable solid waste generated during the same period, thereby reflecting incentives for taxpayers to control pollution and reduce emissions. Second, to reflect penalties for taxpayers’ violations, the Implementation Regulations provide that if a taxpayer illegally disposes of taxable solid wastes, fails to install and use automatic pollutant monitoring equipment as required by law, fails to connect such equipment to the monitoring systems of the environmental protection authorities, damages or arbitrarily moves or alters automatic pollutant monitoring equipment, falsifies or manipulates pollutant monitoring data, or makes false tax declarations, the amount of taxable pollutants generated during the current period shall be taken as the amount of pollutants discharged.

　　 Q: Regarding Article 13 of the Environmental Protection Tax Law, which stipulates reductions in environmental protection tax, how should we interpret and apply the relevant thresholds in practice? Does the implementing regulation provide any specific clarifications on this point?

　　Answer: Article 13 of the Environmental Protection Tax Law stipulates that if a taxpayer’s concentration of taxable atmospheric pollutants or water pollutants is below the emission standards, 30% Yes, reduced rate 75% Imposing an environmental protection tax ; Below emission standards 50% Yes, reduced rate 50% Imposing an environmental protection tax. To facilitate practical implementation, the Implementation Regulations first clarify the calculation methods for the concentration values of taxable air pollutants and water pollutants specified in the above-mentioned provisions: The concentration value of a taxable air pollutant or water pollutant refers to either the hourly average of the concentration values automatically monitored by the taxpayer’s installed automatic pollutant monitoring equipment during the month, averaged again; or the daily average of the concentration values of the taxable water pollutant, averaged again; or the average concentration values of the taxable air pollutants and water pollutants monitored by the monitoring agency during the month. Meanwhile, in accordance with the principle of strict enforcement, the Implementation Regulations further specify and limit the conditions for applying tax reductions: namely, the hourly average of the concentration values of taxable air pollutants or the daily average of the concentration values of taxable water pollutants, as well as the concentration values of taxable air pollutants and water pollutants monitored by the monitoring agency each time during the month, must not exceed the pollutant emission standards set by the national and local authorities.

　　 Q: To ensure the smooth implementation of the collection and management of the environmental protection tax, what provisions does the implementing regulation make?

　　Answer: From a practical standpoint, the collection and administration of the environmental protection tax are relatively more complex. To ensure the smooth implementation of the environmental protection tax collection and administration, the Implementation Regulations not only clarify that local people's governments at or above the county level should strengthen their leadership over the collection and administration of the environmental protection tax and promptly coordinate to resolve major issues arising in this process, but also further specify the respective responsibilities of tax authorities and environmental protection authorities in tax collection and administration, as well as the scope of information exchange between them. Moreover, the Regulations clearly define the determination of tax filing locations, the procedures for resolving disputes over tax jurisdiction, taxpayer identification requirements, specific circumstances involving anomalies in tax filing data, principles for handling discrepancies between pollutant emission data reported by taxpayers and relevant data provided by environmental protection authorities, and the obligation of tax authorities and environmental protection authorities to provide taxpayers free of charge with guidance, training, and advisory services.

　　 Q: The implementation regulations take effect from... 2018 Year 1 Moon 1 The environmental protection tax law will take effect simultaneously with the date of implementation. Will discharge fees still be collected at that time?

　　Answer: According to Article 27 of the Environmental Protection Tax Law, effective from the date of its enactment... 2018 Year 1 Moon 1 Starting from the date of implementation, the discharge fee will no longer be collected. The implementing regulations will take effect concurrently with the Environmental Protection Tax Law, and the "Regulations on the Collection and Use of Discharge Fees," which served as the basis for collecting the discharge fee, will be repealed at the same time.