Article China: New Law Replacing Pollution Discharge Fee With Environmental Protection Tax

(Feb. 8, 2017) On December 25, 2016, China’s National People’s Congress (NPC) Standing Committee passed the Environmental Protection Tax Law.  When it takes effect on January 1, 2018, the Law will replace the existing pollution discharge fee system with a new environmental protection tax.  (Zhonghua Renmin Gongheguo Huanjing Baohu Shui fa, NPC website (Dec. 25, 2016); Environmental Protection Tax Law of the People’s Republic of China, CHINA LAW TRANSLATE (Feb. 1, 2017) (unofficial  English translation); for a description of the draft of the law issued for soliciting public opinion on June 10, 2015, and a link to the text, see Wendy Zeldin, China: Environmental Tax, GLOBAL LEGAL MONITOR (June 23, 2015).)

China has been collecting the pollution discharge fee since 1979.  In 2015, 17.3 billion yuan (about US$2.5 billion) in pollution discharge fees was reportedly collected from some 280,000 businesses.  (Zhu Ningning, Goujian Lüse Shuizhi Maichu Jianshi Bufa [A Solid Step Towards a Green Tax System], LEGAL DAILY (Jan. 3, 2017).)  Among other objectives, the Law aims to address the issues of ineffective enforcement in levying pollution discharge fees and to increase enterprises’ responsibility in pollution reduction.  (Id.)

Some highlights of the Environmental Protection Tax Law are as follows.

Taxpayers and Taxable Pollutants

Entities who directly discharge taxable pollutants into the environment are subject to the environmental protection tax.  (Environmental Protection Tax Law, art. 2.)  The taxable pollutants are air and water pollutants, solid waste, and noise.  Carbon dioxide (CO2) is not included on the list.  (Id. art. 3.)

Role of the Tax Authority

In the old discharge fee system, the levying of fees is managed primarily by the environmental protection authority; the new Law requires coordination of fee collection by the environmental protection authority and the tax authority.  While the environmental protection authority will be  in charge of monitoring pollutants, the tax authority will be in charge of administering the collection of environmental protection taxes.  (Id. arts. 14 & 15.)

New Exemptions and Reductions

The Law provides five types of temporary exemptions, including, among others, exemptions for eligible agricultural pollution, pollution from transportation, and pollution from sewage and household waste.

The current pollution discharge fee system provides only one category of reduction in fee taxpayers can receive 50% off the fee owed if they lower their air or water pollution by half of the national and provincial standards.  (Guanyu Tiaozheng Paiwufei Zhengshou Biaozhun Deng Youguan Wenti de Tongzhi [Notification on Adjusting Levying Standards of Pollution Discharge Fee and Other Related Issues], National Development and Reform Commission (NDRC) website (Sept. 1, 2014), art. 3.)

The Law further provides that taxpayers may receive a 25% reduction if they lower their air or water pollution by 30% below the proscribed standard.  (Environmental Protection Tax Law, art. 13.)

Adjustable at Provincial Level

Because different provinces, autonomous regions, and municipalities face different environmental and economic status quos, the Law authorizes the provincial-level governments to determine and adjust the applicable tax amount on air and water pollution within a specified range.

For air pollutants, the tax rate can be set between 1.2 to 12 yuan (about US$0.173-$1.73) per Pollution Equivalent, i.e. per unit of pollution; for water pollutants, the rate will be between 1.4 to 14 yuan (about US$0.202-$2.02). (Id. arts. 6, 25, & Annex 1.)

Stronger Enforcement Method

Currently, the legal basis for collecting pollution discharge fees is the Regulation on Pollution Discharge Fee Collection, Usage, and Management, issued in 2003, and relevant provincial regulations.  (Paiwufei Zhengshou Shiyong Guanli Tiaoli (issued by the State Council on Jan. 2, 2003, effective on July 1, 2003), CHINA LAWS AND REGULATIONS DATABASE.)  Enforcement of fee payment is also mainly based on these regulations.  With the advent of the Law, violators of its provisions will be held liable under the Law on the Administration of Tax Collection and the Law on Environmental Protection.  (Id. art. 23.)

Prepared by Emma Wei, Law Library Intern, under the supervision of Laney Zhang, Senior Foreign Law Specialist.

About this Item

China: New Law Replacing Pollution Discharge Fee With Environmental Protection Tax
Online Format
web page

Rights & Access

Publications of the Library of Congress are works of the United States Government as defined in the United States Code 17 U.S.C. §105 and therefore are not subject to copyright and are free to use and reuse.  The Library of Congress has no objection to the international use and reuse of Library U.S. Government works on These works are also available for worldwide use and reuse under CC0 1.0 Universal. 

More about Copyright and other Restrictions.

For guidance about compiling full citations consult Citing Primary Sources.

Credit Line: Law Library of Congress

Cite This Item

Citations are generated automatically from bibliographic data as a convenience, and may not be complete or accurate.

Chicago citation style:

China: New Law Replacing Pollution Discharge Fee With Environmental Protection Tax. 2017. Web Page.

APA citation style:

(2017) China: New Law Replacing Pollution Discharge Fee With Environmental Protection Tax. [Web Page] Retrieved from the Library of Congress,

MLA citation style:

China: New Law Replacing Pollution Discharge Fee With Environmental Protection Tax. 2017. Web Page. Retrieved from the Library of Congress, <>.

More Articles like this