On 25December 2016,the Environmental Protection Tax Law of the People's Republic of China (the "EPT Law"),after two rounds of review,was finally approved at the meeting of the National People's Congress (NPC)Standing Committee.It is issued as an order of the president and will enter into force from 1January 2018.

        The approval of the EPT Law is not only a milestone in China's environmental protection legislative work following the enactment of the "harshest Environment Protection Law"two years ago,but also earmarks a step forward in implementing the statutory taxation principle which was put forward on the third plenary session of the 18th Central Committee of the Communist Party of China (CPC).Strictly speaking,the EPT is not a new category of tax but a replacement of the existing pollutant discharge fee (PDF).Hence,the provisions in the EPT Law and the PDF system are linked in many aspects.Moreover,considering the downward pressure on the economy faced by Chinese enterprises recently,the replacement of the PDF system with EPT Law is not intended to increase tax revenue.Therefore,in principle the tax burden of enterprises would not be increased.Meanwhile,certain preferential tax treatments are granted to encourage enterprises to take up the responsibility of environmental protection.

        In this issue of China Tax/Business News Flash,we will look back at the background of the enactment of EPT Law,introduce the main contents of the EPT Law and a comparison with PDF,and share our observations of the potential impact on relevant enterprises.Taxpayers subject to the existing PDF,especially those big polluters engaged in chemical industry or nonferrous metals industry,should pay close attention to it.Enterprises engaged in providing environmental protection services or developing relevant equipment can take advantage of this opportunity to promote their business.