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Deng Baisong, the general manager of Xiangyang Longmang Titanium Industry Co Ltd, shows an environmental protection tax receipt at the company in Xiangyang, Hubei province, April 2, 2018. [Photo/VCG]

BEIJING -- Over the weekend, China"s local tax bureaus were crowded with taxpayers, as China"s first environmental tax declaration period started on April 1.

Under the Environmental Protection Tax Law in effect since Jan 1, companies and public institutions that discharge listed pollutants directly into the environment are subject to taxes for producing noise, air, and water pollution, as well as solid waste.

"It only took a few minutes to register, transfer, and receive a tax invoice," said Ke Yuanmei, CFO of Kading Children Products Co. Ltd., which got the first environmental tax receipt in East China"s Fujian province.

He said the tax gives companies an incentive to cut emissions and upgrade production technology, as the mechanism charges them based on the amount of pollutants discharged.

Zhang Jinshan, an official with the Fujian Tax Bureau, said the bureau extended working hours over the weekend and set up an information desk to provide guidance and services to make tax declaration more convenient. Taxpayers can also declare the tax online.

"We will further optimize our manufacturing techniques to reduce pollution," said a financial representative from BASF Application Chemical Co. Ltd., which was the first company to complete the tax payment in Shanghai.

The company received a tax reduction of 600 yuan ($95) as its pollution discharge was lower than China"s national standard for the sector. It paid 8,800 yuan in tax for the first quarter.

Nationwide, over 260,000 entities have started to pay the environmental tax, which is applicable only to companies, public institutions, and other business operators.

This is China"s first tax clearly designed for environmental protection, which aims to help establish a "green" financial and taxation system and promote pollution control and treatment.

The introduction of the tax called an end to the "pollutant discharge fee," which China had been collecting for nearly 40 years.

Xiao Jiongdong, financial manager of Quanzhou Nanxin Bleaching and Dyeing Company, said though detailed items of the tax are almost the same as those in the fee era, it makes it easier for taxpayers to complete their duties. Companies can pay the environmental tax along with their corporate tax declaration.

"In the past, we did not know how much we should pay in advance, but now we know the exact tax payment before declaration," said Xiao.

He said the tax also has a more authoritative effect than administrative fees.

According to the Fujian environmental department, there were often defaults in paying pollutant discharge fees. The bureau lacked the manpower to impose effective supervision to carry out mandatory fee collection.

Xiao said last year, the company phased out the energy-consuming and pollution-extensive skein dyeing workshop and expanded the cone dyeing output.

"We paid a 17,000 yuan pollution discharge fee in the first quarter of 2017, while the environmental protection tax we paid for the first quarter of this year was 12,000 yuan," said Xiao.

The tax saved is only part of a big picture. According to Xiao, the technological upgrading also helped cut the cost of the company"s natural gas consumption from 800,000 yuan to 500,000 yuan per month, and their water cost was reduced by half.

"The environmental protection tax is not a mere source of government revenue," said Fan Yong, professor at Central University of Finance and Economics, "it is more of an important step to build a green China."


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