The
recently published Environment Protection Tax Law of the Chinese government
will replace the pollution discharge fee system into an environmental
protection tax. This law is likely to change the current practice of highly
polluting industries, including the pharmaceutical industry, into an
environmental considering production in order to save taxes, according to CCM.
Source: Pixabay
The
new Environmental Protection Tax Law was revealed on December 25, 2016, and is
going to come into effect in the beginning of 2018. It will mainly replace the
current pollution discharge fee by the Chinese government with a new
environmental protection tax.
The
new law is necessary, because, under the old law, many local governments in
China have been put more focus on the economy growth on the costs of the
environment. Some pollutant manufacturers were even allowed to pay fewer
pollution fees when their contribution to the economy was big enough.
The
new law is the first one of its kind in China, aiming to get successful actions
against the growing pollution in the country and protect the environment from
heavy pollution discharges of several industries. The key factor to convince
enterprises establishing environmental friendly productions and discharge
systems lays in a tax reduction for significant pollution reducing actions.
To
be more precise, the tax allows a tax reduction of 25%, if the pollution
discharge, mainly wastewater and air pollution, is 30% lower than the national
or provincial standard for this pollution concentration. If the company is even
able to keep its pollution 50% lower than the standard concentration, they can
apply for a 50% tax reduction at all. So, the system clearly benefits
environmental protection solutions of enterprises with lowering their costs.
Besides air and water pollution, also noise pollution will be charged by taxes.
Furthermore,
the new law seeks to standardize the governmental regulation on pollutant
discharge, according to CCM. It will also optimize the partly outdated
industrial structure of several industries and helps to establish a more
sustainable economic structure.
The
vitamins industry is one of the heavily polluting industries, beneath
chemicals, cement, and pharmaceutical industry. As a result, the environmental
protection tax law will without any doubt have a massive effect on the
manufacturers in China and their efforts for a cleaner production.
As
a fact, most of the vitamins producers in China are dealing with active
pharmaceutical ingredients (API), according to CCM. Therefore, they show a lack
of innovations and a development of their business to a more valuable production.
It is even common to just increase the product volume and lower the price to
achieve a higher sales volume. This, of course, has weakened the profitability
of most of the vitamins manufacturers in China, according to CCM.
Now
with the implementation of the new law, China’s manufacturers are facing
stricter regulations, that are threatening the regular business they are doing.
In the long term, the law may forces traditional producers with a lack of
innovation and technological upgrades to shut down the business.
The
new law was passed by the Standing Committee of China’s National People’s
Congress. The direct tax payment of pollutants will make them liable under the
Chinese law and closes any loopholes that had been taken advantage by several
companies. The new environmental protection tax will be calculated monthly and
has to be paid by the companies on a quarterly basis.
According
to Reuters, the new tax rate will be RMB1.2 (USD0.17) per unit for the air
pollution. For the water pollution, the tax will be RMB1.4 per unit.
Finally,
the new system is also expected to bring much more money into the governmental
account. While the old pollution fee system collected about USD2.5 billion a
year, the new system is expected to enable money collections in the value USD50
billion in the first year after its implementation.
About CCM:
CCM
is the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets.
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