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Energy and Water Conservation Tax Incentive Application Procedure Updated

In the case of businesses looking to secure the preferential income tax benefits accruing from their use of specifically-approved environmentally-friendly energy and water conservation systems, the overall application process has now been streamlined in accordance with new guidelines jointly issued by the Ministry of Finance (MOF) and four other government departments. The list of systems deemed to qualify for such incentives has also been revised.

Under these revised protocols, qualifying enterprises will be entitled to complete a self-assessment detailing their proposed tax benefit entitlement. It will then be incumbent upon any business seeking such preferential tax concessions to justify the eligibility of the individual eco-friendly systems they have adopted, while they will also be obliged to file all of the required documentation with the relevant tax office. It will then be left to the discretion of the tax office in question to pursue any additional assessments deemed to be required or to conduct any confirmatory audits.

This 2017 update to the prevailing tax incentive regime and the associated eligibility procedures was deemed to have retroactively come into effect as of 1 January 2017, with the previous procedural framework, as adopted from 2008 onwards, superseded from 1 October 2017. Tax incentive eligibility, however, may still apply in instances where enterprises purchased systems qualifying within the terms of the 2008 framework during the period 1 January 2017 to 30 September 2017.

For further details (in Chinese), please refer to the following link:

MOF Circular (Cai Shui No.71 [2017])

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