Environmental tax

1.What are the main environmental taxes?

The Environmental Protection Tax Law of the People’s Republic of China (Environmental Tax Law) came into force on 1 January 2018. The categories of tax governed under the Environmental Tax Law include atmospheric pollutants, water pollutants, solid waste (hazardous waste) and noise.

Tax liability

Under the draft Law on Environmental Protection Tax, enterprises, entities, and other producers and operators that directly emit taxable pollutants to the environment within the territory and other sea areas under PRC jurisdiction pay environmental protection tax.

Tax rates

The tax basis of taxable pollutants will be determined as per the following methods (Article : Law on Environmental Protection Tax):

  • Taxable air and water pollutants will be determined by a pollution equivalent number converted from the pollutant emission amount.
  • Taxable solid waste will be determined by the solid waste emission amount.
  • Taxable noise will be determined by the decibels in excess of the national standard.


  1. Are there any proposals for significant reform of environmental law?

The main proposals/recent reforms include the:

  • Implementing Measures for the Trial Programme of the Institution of Public Interest Litigation by the People’s Procuratorate, which came into effect in July 2015.
  • Guiding Opinions on the Pilot Reform of the Vertical Management System for the Monitoring, Supervision and Law Enforcement of Environmental Protection Agencies below the Provincial Level, which came into effect in September 2016.
  • Permitting regime for the discharge of pollutants. On 21 November 2016, the General Office of the State Council issued the Implementation Plan for the Permit System for Controlling Pollutants Emission (Implementation Plan).The Implementation Plan established the basic principle that one enterprise can only have one pollutant discharge permit, and specified that the permitting regime for the discharge of pollutants is the core of the environmental system. For enterprises, the pollutant discharge permit is the only administrative permit for their pollutant discharge during the production and operation period. For EPAs, the pollutant discharge permit is the basis of environmental law enforcement.
  • Vertical administration of the environmental protection regime. The pilot project regarding reform of vertical administration of the environmental protection regime was launched in September 2016. The reform is expected to be complete before June 2018. Until 2020, EPAs at provincial level must implement the new regime effectively, nationwide.
  • Environmental impact assessment regime. From 1 January 2017, during the working procedure of environmental impact assessment, public participation is separated from the formulation of environmental impact assessment documents (Technical guideline for environmental impact assessment of construction projects – General Programme (HJ2.1-2016)). The MEP is currently reviewing the law relating to interim measures for public participation in environmental impact assessment.
  • Total pollutants discharge control index regime. The implementation plan governs that:
  • the total pollutants discharge control index on enterprises and institutions must be implemented based on the enforcement of the permitting regime for the discharge of pollutants;
  • under the total pollutants discharge control index regime, the total pollutants discharge control index would be further implemented and set on specific enterprises and institutions (which is different from the previous practice under which the index was set on administrative regions);
  • the total pollutants discharge control index, after being approved, cannot be increased;.
  • more kinds of pollutants discharged by enterprises are controlled (for example, NOX, NH3, COD, and SO2).
  • the control requirements are different, depending on the districts and industries;
  • enterprises may need to obtain the pollutants discharge quota by trading with the quota.