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Pilots for water resource tax will be expanded within this year


China initiated the pilot for water resource tax on July 1, 2016. Considering the complexity of water resource issue, Hebei province is the only province in China that sets up the pilot for water resource tax, so as to ensure that the reform moves forward in a stable and orderly way. Measures are taken in Hebei province to replace water resource fee with tax, levy tax on surface water and groundwater, raise tax on water-intensive industries, water utilization that exceeds the prescribed amount, and on water exploitation in areas with over-exploitation of groundwater. The tax on domestic and industrial water utilization will remain unchanged.


As the reform of fee-to-tax is implemented, the tax revenue in Hebei province increases substantially. The fee revenue per month in 2015 was 78 million yuan, while the tax revenue per month after the fee-to-tax reform reaches 143 million yuan, up by 65 million yuan over the average fee revenue per month in recent 3 years, an increase of 83%.


Based on the experience in Hebei province, Ministry of Finance and State Administration of Taxation will expand the scope of fee-to-tax pilot and then implement it nationwide. The pilot in Heibei province will be assessed by a third party. With the assessment results as a reference, the government will set up pilots in other regions.



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