Last week, Guangzhou issued China’s first policy to subsidize garbage disposal enterprises with financial revenue. On March 2, Guangzhou Local Tax Bureau launched tax incentives for garbage disposal enterprises and brought forward exemption of business tax, and exemption of enterprise income tax for the first three-year period and 50% reduction of enterprise income tax for the second three-year period.

One tax incentive is the exemption of business tax for household garbage disposal enterprises. According to the Official Response of the State Administration of Taxation on Relevant Issues of Imposing Business Tax on Disposal Charge of Garbage (Guo Shui Han [2005] No. 1128), the garbage disposal service offered by enterprises and individuals mainly cover household garbage, medical refuse, hazardous waste, medical waste and radioactive waste. Thus, no business tax will be imposed on garbage disposal enterprises .

 

The other tax incentive is exemption of enterprise income tax for the first three-year period and 50% reduction of enterprise income tax for the second three-year period. In accordance with the Enterprise Income Tax Law of the People's Republic of China and the Regulation on its implementation, as for enterprises engaged in the specified processing of public sewage, the processing of public garbage, the comprehensive exploitation and utilization of firedamp, the renovation of technologies of saving energy or discharging wastes, their qualifying income obtained by an enterprise from engaging in any of the environmental protection or energy-saving or water saving projects as described in the preceding scope shall be exempted from the enterprise income tax for the first three years as of the tax year the first revenue arising from production or operation is attributable to, and shall be taxed at the reduced half rate for the fourth to the sixth years.

Source: Nanfang Metropolis News, March 3, 2015