Large swaths of northern China have been experiencing severe air pollution over the past month. Over 70 cities issued air pollution warnings due to dangerous levels of smog, and PM2.5 particles in Beijing topped 400 micrograms per cubic meter. In this context, it is no surprise that environmental pollution is a hot topic in China, with people expressing outrage, and the government seeking new ways to curb and reverse trends of deteriorating environmental quality, and to increate environmental protection. As part of this an Environmental Protect Tax will hit companies which emit high levels of certain pollutants.
The tax stems from the Law on Environmental Protection, passed in December 2016, and coming into effect on January 1, 2018.
Prior to this law, the government had haphazardly applied a pollutant emission fee on offending companies. The soon to take effect tax will be higher and more broadly distributed than the old fee, and will hit more companies. The hope is that the new higher tax penalty with encourage high polluting companies to switch over to more environmentally friendly operations.
Pollutants subject to taxation will include those emitted into the air and water, solid waste, as well as noise. To encourage enterprises to decrease levels of pollutants, the new law also stipulates that if the concentration of these pollutants is 30% lower than the standard set by the government, only 75% of the tax will be levied. If the pollutants are 50% lower than the standard, the tax rate will be 50%.
Paying the tax does not absolve companies form other liabilities in connection with pollution. Under the new law, companies will bear full legal responsibility for any damaged caused by pollution generated by the company.
We expect this new law to play an important role in protecting the environment, and will encourage polluting companies to seek better ways to operate in harmony with the environment and with the people who have to breathe the air and drink the water in these areas. If you are concerned about the pollution impact of your China company, the time to contact your China Lawyers and learn about this new law is now.