On October 11th, 2024, three authorities including the Ministry of Finance (MOF) jointly released the Implementation Measures for the Pilot Reform of Water Resource Tax (the "Measures"), set to take effect on December 1, 2024.
The Measures outline regulations regarding elements of the tax system, such as taxpayers, tax base, tax rate standards, and tax incentives related to the water resource tax, stating that the water resource tax will be collected at differentiated rates based on the conditions of water resources, types of water usage, and economic development. The State will establish a minimum average tax rate standard for each province, autonomous region, and municipality directly under the Central Government, while local authorities will determine specific applicable rates. Additionally, the Measures mandate that higher tax rates be set for groundwater extraction and in regions facing significant water scarcity or over-extraction. They also clarify that, following the full implementation of the water resource fee-to-tax reform pilot program, all revenue from the water resource tax will be allocated to local governments.
Source: mof.gov.cn