CHINA Law and Practice Contributed by: Rongliang Wu, Mei Wan, Qirong Huang and Xueqi Huang, Jin Mao Law Firm
6.2 Environmental Taxes Per the Environmental Protection Tax Law, enterprises that directly discharge taxable pollutants into the envi- ronment must pay the Environmental Protection Tax. Taxable pollutants include noise, air pollutants, water pollutants and solid waste, as specified in the Table of Environmental Protection Tax Items and the Table of Taxable Pollutants and Equivalent Values. In October 2025, the Standing Committee of the National People’s Congress amended the Environ- mental Protection Tax Law, authorising the State Council to launch a pilot programme that levies the Environmental Protection Tax on enterprises that directly emit volatile organic compounds not listed in the Table of Taxable Pollutants and Equivalent Values. Another type of green tax is the Resource Tax. The Resource Tax Law defines taxable products as energy minerals (oil, natural gas, coal, geothermal, etc), metal minerals, non-metallic minerals, hydrous minerals and salt. Enterprises developing taxable resources within China’s territory and its jurisdiction over other sea areas must pay the Resource Tax per the law. 6.3 Incentives, Exemptions and Penalties Tax Incentives Environmental Protection Tax breaks Per the Environmental Protection Tax Law and its implementing regulations, if the concentration of tax- able air/water pollutants is 30% below national/local limits, only 75% of the tax is levied; if it is 50% below limits, only 50% is levied. Legally established urban- rural sewage/domestic waste centralised treatment sites that discharge pollutants within standards are exempt from this tax. Enterprise Income Tax and VAT incentives Per the Regulations for the Implementation of the Enterprise Income Tax Law, the environmental treat- ment industry and businesses investing in pollution control equipment or energy-saving technologies may qualify for incentives. However, enterprises with over CNY100,000 in administrative penalties lose VAT refund eligibility for six months.
• the limitation period of three years (for continu- ing acts, from the date of the end of the act) has expired; • force majeure exists; or • there has been fault on the part of a third party or the victim. Administrative Liability and Key Defences The main defences against environmental administra- tive liability are: • limitation period – if normal/general illegal acts are not found within two years, there should be no administrative punishment, but the limitation period will be extended to five years for acts that involve citizens’ lives, health and safety, financial safety and causing harmful consequences; • the identification of the responsible person is inac- curate; • the fact determination is inaccurate and the evi- dence lacks authenticity, legitimacy and relevance; • the law enforcement procedures are not in compli- ance with law; • the suspects did not commit intentional or negli- gent mistakes; or • the illegal circumstances are minor or the conse- quences are not serious. In recent years, various provinces and cities have introduced a “list of exemptions for minor offences” and discretionary rules. 6. Corporate Liability 6.1 Liability for Environmental Damage or Breaches of Environmental Law An enterprise that violates the laws and regulations relating to environmental protection may be subject to criminal, civil or administrative liability. (For more details, see 5.1 Key Types of Liability .) In addition, this may have a negative impact on the environmental credit evaluation of the enterprise. It will be subject to negative public evaluation results, suffer loss of eligibility for government procurement, be impacted regarding bank loan financing, and be subject to more frequent supervision and other disciplinary actions.
86 CHAMBERS.COM
Powered by FlippingBook