To facilitate the comprehensive green transformation of economic and social development and implement the sustainable development strategy, China has introduced a series of preferential tax and fee policies to support green development. To this end, the State Administration of Taxation has issued the Guidelines on Preferential Tax and Fee Policies for Supporting Green Development (hereinafter referred to as the “Guidelines”) on June 1^st, 2022.

The Guidelines cover 56 preferential tax and fee policies to support green development in four main aspects: 1. supporting environmental protection, 2. promoting energy conservation and environmental protection, 3. encouraging comprehensive utilization of resources, and 4. promoting the development of low-carbon industries.

1. Supporting Environmental Protection

In order to reduce the discharge of major pollutants and effectively control environmental risks, the Government actively supports the construction of ecological and environmental protection projects, promoting enterprises to speed up the upgrading of environmental protection equipment, third-party governance of environmental pollution, and the optimization of the development of the natural ecological environment.

Specifically, the Guidelines provide for four tax incentives for environmental protection and two tax incentives for soil and water conservation.

2. Promoting Energy Conservation and Environmental Protection

To strengthen environmental management and governance, greatly reduce the intensity of pollutant emissions, reduce the impact of industrialization and urbanization on the ecological environment, improve the living environment, and strive to improve environmental quality, the current tax policy promotes energy performance contracting projects and ensuring residential heating. In addition, a series of preferential policies have been implemented to continuously improve the quality of air and water environment, and effectively control soil pollution.

Specifically, the Guidelines include three tax incentives for energy performance contracting projects, three tax incentives for heating enterprises, three tax incentives for energy-saving and environmentally friendly batteries, paint tax incentives, three energy-saving and water-saving tax incentives, three new energy vehicle and ship tax incentives, and three water saving tax incentives.

3. Encouraging Comprehensive Utilization of Resources

The Government has continuously increased the support of preferential tax policies for comprehensive utilization of resources, strengthened policy support for comprehensive utilization of waste, sewage and garbage treatment, efficient utilization of mineral resources, and construction of water conservancy projects, and strived to improve the efficiency of resource utilization and promote a comprehensive green transformation of economic and social development. 

Specifically, the Guidelines include seven tax incentives for comprehensive utilization of resources, four tax incentives for sewage treatment, seven tax incentives for mineral resource exploitation, and three tax incentives for water conservancy project construction.

4. Promoting the Development of Low-Carbon Industries

By increasing policy support for the development and utilization of clean energy such as solar energy, wind energy, hydro energy, and nuclear energy, such support will provide a guarantee for the scientific and orderly realization of carbon peaking and carbon neutrality goals and the construction of a modern economic system.

Specifically, the Guidelines include two tax incentives for clean development mechanism (CDM) funds and CDM projects, and seven tax incentives for the wind, hydropower, photovoltaic power generation and nuclear power industries.

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