China’s New Environmental Tax Law: Impact on Industrial Sector

 China has been facing significant environmental issues related to air and water pollution from the industrial sector. The government has adopted various regulations to control pollution, such as discharge fees. However, the fees are insufficient to cover the cost of investments in pollution treatment measures across the country.

 Beginning 1 January 2018, China shifted to Environmental Tax Law from discharge fee collection, with an intention of strengthening law enforcement. The shift has been accompanied by an increase in costs, leading to a stronger tax burden on pollutant-discharging companies. Meanwhile, it also reinforces the encouragement for reducing discharge by adding a more accessible discount offer.

 The ongoing supervision from the Ministry of Ecology and Environment has resulted in suspensions of around 35% of the examined business in certain industries. Some provinces have implemented mandatory relocation to closely monitored zones.

 While the new tax law might not significantly impact the profitability of larger companies, we believe that the smaller players might be affected.

 Further, the environmental protection equipment market should benefit from the tightening of regulation as compliance increases, and witness rapid growth in future. Leading local players have seen substantial increases in revenue during this new “green” revolution.


Report Index

  • Executive Summary
  • Snapshot of Environmental Pollution in China
  • Changes to Environmental Regulations
  • Impact on Pollutant Dischargers
  • Beneficiaries of Tightened Regulation

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