Page 11 - The South China Business Journal
P. 11
8. As the government law of a statutory tax, the EPT
Law changes the past model of “charging and managing
the PDF by the environmental protection authorities”
into the new model of “filing by enterprises, collection
by tax authorities, coordination by environmental pro-
tection authorities, and information sharing by relevant
parties”. This change creates new challenges for enter-
prises discharging pollutants that have affected PDF.
The EPT is calculated based on the volume of the pol- on the following key points: a) affected enterprises need
lutants discharged and will be directly collected from to consider if there is any room to reduce emission from
those enterprises and other production operators re- each emission outlet in order to become eligible for cor-
sponsible for environmental emission in the territory of responding tax preferential treatments; b) the eligible
China and other waters under China’s jurisdiction. The enterprises need to archive sufficient and prudential
EPT applicable pollutants included air pollutant, water evidences to support its eligibility of applied tax prefer-
pollutant, solid waste and noise pollution. Meanwhile, ential treatments.
the EPT Law also provides tax deduction and exemption
for specific taxable activities such as agricultural produc- 4. Internal systems and management
tion and pollutants emitted by mobile pollution sources. Relevant data sources of environmental tax returns
should be consistent with data derived from relevant
Andy Leung from EY Indirect Tax Team2 suggests business departments. In addition, companies should
that enterprises need to pay attention to the following pay attention to the late filing of environmental taxes,
aspects before EPT Law becomes effective: which may result in late payment surcharges, penal-
ties and impact on tax credit ratings. In addition, the
1. Change of tax burden enterprises should also pay attention to interface the
With the introduction of EPT Law, tax authorities will monitoring equipment/methods adopted by the busi-
be responsible for tax levy and collection, while envi- ness department with financial system and tax declara-
ronmental protection authorities will be in charge of tion system.■
monitoring and management upon pollutant. In this
regard, after tax authority takes over the collect power, Way forward
the affected enterprises need to consider whether the As environmental protection tax gains growing attention from the
actual financial burden will be affected as the tax basis government, affected enterprises are inevitably facing challenges from
of EPT will be treated more strictly. the newly released environmental policies and the EPT law. EY suggests
affected enterprises should consider to taking appropriate actions as
2. Tax compliance soon as possible to respond to the potential influences and opportuni-
There are various methods of taxable pollutant moni- ties from now on. If you have any questions, please feel free to contact
toring and tax calculation, such as (a) using automatic our speakers Brian Ho (brian-ck.ho@hk.ey.com) and Andy Leung
pollutants monitoring equipment, (b) applying the (andy-sy.leung@cn.ey.com).
monitoring data released by the testing agencies, (c) us-
ing pollutant emission coefficient and material balance Disclaimer
method. In all methods, enterprises need to consider This material has been prepared for general informational purposes
how to retain related sufficient related evidences in only and is not intended to be relied upon as accounting, tax or other
response to any tax authorities’ audit. In the future, if professional advice. Please refer to your advisors for specific advice.
affected enterprises fail to calculate EPT using the above
three methods or other calculation methods recognized
by the tax authorities, then the authorities could apply
deemed basis. Enterprises need to consider the impact
under different methods.
3. Tax preferential treaments
Affected enterprises also need to pay attention to tax
preferential treatments under the EPT law with a focus
2 Andy Leung, Partner of Indirect Tax Team
South China Business Journal 9
Law changes the past model of “charging and managing
the PDF by the environmental protection authorities”
into the new model of “filing by enterprises, collection
by tax authorities, coordination by environmental pro-
tection authorities, and information sharing by relevant
parties”. This change creates new challenges for enter-
prises discharging pollutants that have affected PDF.
The EPT is calculated based on the volume of the pol- on the following key points: a) affected enterprises need
lutants discharged and will be directly collected from to consider if there is any room to reduce emission from
those enterprises and other production operators re- each emission outlet in order to become eligible for cor-
sponsible for environmental emission in the territory of responding tax preferential treatments; b) the eligible
China and other waters under China’s jurisdiction. The enterprises need to archive sufficient and prudential
EPT applicable pollutants included air pollutant, water evidences to support its eligibility of applied tax prefer-
pollutant, solid waste and noise pollution. Meanwhile, ential treatments.
the EPT Law also provides tax deduction and exemption
for specific taxable activities such as agricultural produc- 4. Internal systems and management
tion and pollutants emitted by mobile pollution sources. Relevant data sources of environmental tax returns
should be consistent with data derived from relevant
Andy Leung from EY Indirect Tax Team2 suggests business departments. In addition, companies should
that enterprises need to pay attention to the following pay attention to the late filing of environmental taxes,
aspects before EPT Law becomes effective: which may result in late payment surcharges, penal-
ties and impact on tax credit ratings. In addition, the
1. Change of tax burden enterprises should also pay attention to interface the
With the introduction of EPT Law, tax authorities will monitoring equipment/methods adopted by the busi-
be responsible for tax levy and collection, while envi- ness department with financial system and tax declara-
ronmental protection authorities will be in charge of tion system.■
monitoring and management upon pollutant. In this
regard, after tax authority takes over the collect power, Way forward
the affected enterprises need to consider whether the As environmental protection tax gains growing attention from the
actual financial burden will be affected as the tax basis government, affected enterprises are inevitably facing challenges from
of EPT will be treated more strictly. the newly released environmental policies and the EPT law. EY suggests
affected enterprises should consider to taking appropriate actions as
2. Tax compliance soon as possible to respond to the potential influences and opportuni-
There are various methods of taxable pollutant moni- ties from now on. If you have any questions, please feel free to contact
toring and tax calculation, such as (a) using automatic our speakers Brian Ho (brian-ck.ho@hk.ey.com) and Andy Leung
pollutants monitoring equipment, (b) applying the (andy-sy.leung@cn.ey.com).
monitoring data released by the testing agencies, (c) us-
ing pollutant emission coefficient and material balance Disclaimer
method. In all methods, enterprises need to consider This material has been prepared for general informational purposes
how to retain related sufficient related evidences in only and is not intended to be relied upon as accounting, tax or other
response to any tax authorities’ audit. In the future, if professional advice. Please refer to your advisors for specific advice.
affected enterprises fail to calculate EPT using the above
three methods or other calculation methods recognized
by the tax authorities, then the authorities could apply
deemed basis. Enterprises need to consider the impact
under different methods.
3. Tax preferential treaments
Affected enterprises also need to pay attention to tax
preferential treatments under the EPT law with a focus
2 Andy Leung, Partner of Indirect Tax Team
South China Business Journal 9
