Announcement of the State Administration of Taxation, the Ministry of Finance, and the Ministry of Water Resources on Issues Concerning the Collection and Administration of Water Resources Tax 

Announcement No. 12 of 2024 by the State Administration of Taxation, the Ministry of Finance, and the Ministry of Water Resources

To implement the spirit of the Third Plenary Session of the 20th CPC Central Committee, and pursuant to the Resource Tax Law of the People's Republic of China and the Circular of the Ministry of Finance, the State Administration of Taxation and the Ministry of Water Resources on the Issuance of the Pilot Measures for the Implementation of Water Resources Tax Reform (Cai Shui 〔2024〕 No. 28), the following provisions are hereby announced  regarding the collection and administration of water resources tax:

I. Taxpayers subject to water resources tax based on the actual power generation volume shall calculate their taxable power generation as the sum of all generating units’ measurements, including on-grid electricity, comprehensive plant electricity consumption, and transmission losses.

II. For taxpayers utilizing water resources allocated and dispatched by water project management units, the taxable location shall be the location of the water intake connected to the water project management unit. The applicable tax rate shall be based on the tax standards of the location of the water intake.

III. The portion of water resources tax separately listed in end-user composite water prices by urban public water supply enterprises may be deducted from the VAT taxable basis and shall be invoiced as ordinary invoices under the "Non-VA T Tap Water" category.

IV. Taxpayers claiming preferential policies for water resources tax shall adopt  a "self-assessment, declaration for benefits, and retention of supporting documents for inspection" approach. Retained documents shall include water intake measurements, power generation data, and other relevant materials. Taxpayers shall bear legal  responsible for the authenticity, completeness and legality of the retained documents.

Taxpayers claiming exemptions from water resources tax for ecological water use must additionally retain supporting documents issued by county-level or higher people’s governments  and relevant departments. These documents shall include the taxpayer's name, unified social credit code, start and end dates of ecological water use, type of water source, volume of water used, location of water intake, and other relevant information.

V.  Taxpayers shall file water resources tax declarations by completing the Detailed Table of Water Resources Tax Sources (Attachment 1) as part of the comprehensive property and behavior tax declaration.

VI. Taxpayers withdrawing water through two or more intakes shall measure and declare the actual water intake volume for each intake separately. If a single water intake license covers multiple intakes subject to the same tax rate, and the water administrative department has issued a combined licensed water volume or water intake plan, the taxpayer may declare and pay water resources tax for the total water intake volume under the license.

For taxpayers holding a water intake license, the water intake location shall be determined based on the information stated in the license. For taxpayers without a license, the water intake location shall be determined by the water administrative department.

In cases where taxpayers face difficulties in declaration due to multiple water intakes, provincial financial, tax, and water administrative departments may allow consolidated declaration and payment of water resources tax upon approval.

VII. Taxpayers shall recalculate the tax payable based on the adjusted volume or plan and submit a corrected declaration, if the water administrative department adjusts a taxpayer's licensed water volume or intake plan in accordance with laws and regulations.

VIII. Taxpayers shall maintain water intake measurement records and other relevant documents in accordance with tax collection and water intake measurement management regulations.

IX. Tax authorities shall identify taxpayers based on water intake permits and illegal water use information provided by water administrative departments.

X. The Ministry of Water Resources, in collaboration with relevant departments, shall compile and dynamically update a list of areas with severe water shortages or overexploitation. Prior to the Ministry's publication of the list, provincial water administrative departments, in consultation with relevant departments, may determine the specific scope of such areas within their jurisdiction.

XI. Provincial water administrative departments, in collaboration with finance and tax departments, shall annually publish by March 31 a list of industrial taxpayers whose water use efficiency met or exceeded the national advanced water quota standards in the previous year. Taxpayers on the list may enjoy a 20% reduction in water resources tax for the corresponding industrial water use in the current year.

If a taxpayer is found to have engaged in unauthorized water intake, overuse of licensed or planned water volumes, groundwater overexploitation, or unauthorized changes in water use, they shall be disqualified from the preferential policy starting from the month the violation occurred.

Taxpayers on the list undergoing name changes, restructuring, or other significant changes affecting their eligibility shall report to the provincial water administrative department and provide supporting documents. The provincial water administrative department, in consultation with finance and tax departments, shall determine whether the taxpayer remains eligible for the preferential policy and update the list accordingly.

Provincial water administrative departments, in collaboration with finance and tax departments, shall strengthen supervision of listed taxpayers. If a taxpayer is found to have obtained tax reduction eligibility through false information or other non-compliant means, the list shall be adjusted promptly. Tax authorities shall handle such cases in accordance with the Tax Collection and Administration Law of the People's Republic of China and its implementing rules.

XII. Provincial water administrative departments shall inspect the standardization of taxpayers' water intake measurements and accelerate the establishment of water intake measurement archives. The coverage of online water intake measurement shall be expanded. If a taxpayer is found to require water volume verification by the water administrative department during routine supervision, the taxpayer and tax authorities shall be notified before the end of the tax declaration period. The taxpayer shall be issued a Water Intake Volume Verification Certificate (Attachment 2) for the current period, based on which the taxpayer shall declare and pay taxes.

XIII. Provinces that have previously implemented the water resource fee-to-tax pilot program may maintain their existing collection and administration models temporarily and gradually adjust them in accordance with current regulations during the pilot period. Specific arrangements shall be determined by the relevant provincial tax and water administrative departments.

XIV. This announcement shall take effect on December 1, 2024. In case of any inconsistency with previous provisions, this announcement shall prevail. The Announcement of the State Administration of Taxation on VAT Invoice Issues for Urban Public Water Supply Enterprises After the Conversion of Water Resource Fees to Taxes (No. 47 of 2017) is hereby repealed.

State Administration of Taxation

Ministry of Finance

Ministry of Water Resources

December 10, 2024