In order to reduce the discharge of major pollutants and effectively control environmental risks, the State Administration of Taxation recently issued the "Guidelines for Tax and Fee Preferential Policies in Support of Green Development" which implements preferential tax policies and promotes high-quality development. Let's take a look at some of the main content together：

（1）         Tax incentives for contract energy management projects:

·  Contracts of energy management projects are temporarily exempt from value-added tax (goods and services)

·  Companies implementing contract energy management projects may enjoy a reduction and exemption of corporate income tax on income from energy-saving services.

（2）          Tax incentives for heating enterprises

· The heating fee income obtained by heating enterprises is exempt from value-added tax;

· Factory buildings used by heating enterprises are exempt from property tax;

· Land used by heating enterprises is exempt from urban land use tax.

（3）         Tax incentives for energy-saving and environmentally friendly batteries and coatings

·         Energy-saving and environmentally friendly battery protection or coatings are exempt from consumption tax;

（4）         Energy and water-saving tax incentives

·         Drip irrigation products are exempt from value-added tax;

·         Income from engaging in energy-saving and water-saving projects that meet the required conditions will benefit from a reduction or exemption of corporate income tax;

·         The investment amount for purchasing specialized equipment for energy and water conservation shall be subject to a certain proportion of enterprise income tax credit.

（5）         Tax preference for new energy vehicles and ships

·         New energy vehicles and vessels are exempt from vehicle and vessel tax while energy-saving vehicles will benefit from a 50% reduction;

·         New energy vehicles are exempt from vehicle purchase tax.

（6）         Tax incentives for water saving resources

·         There shall be an exemption of water resource tax on reclaimed water from sewage treatment, pumped storage power generation, or reinjection of oil extraction drainage after separation and purification in closed pipelines

（7）         Tax incentives for pollutant reduction

·         Exemption from environmental protection tax on pollutants discharged from agricultural production or discharged from centralized treatment sites for urban and rural sewage and domestic waste.

·         If the emission of taxable air pollutants or water pollutants whose concentration value is lower than the pollutant discharge standards stipulated by the state and local level governments, the environmental protection tax can be reduced.

At PHC Advisory, our team is constantly monitoring the most recent incentives, subsidies, and exemptions accessible to businesses in China. Feel free to reach out to us at info@phcadvisory.com to find out more about preferential policies in China that your company could benefit from.