ECONOMY

China Broadens Environmental Tax to Target Major Air Pollutants

Published: Oct. 29, 2025 5:15 p.m. GMT+8

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The Environmental Protection Tax Law of the People's Republic of China. Photo: VCG

China will expand its environmental protection tax to cover all volatile organic compounds (VOCs) through pilot programs, marking the first broadening of the levy’s scope since it took effect in 2018.

The decision to amend the Environmental Protection Tax Law was passed Tuesday by the country’s top legislature, effective immediately. It authorizes the State Council to launch pilot schemes to tax all VOC emissions from businesses and other producers.

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China will expand its environmental protection tax to include all volatile organic compounds (VOCs) via pilot programs, starting immediately.
The tax previously covered only 18 VOCs since the law's 2018 implementation; VOCs are significant contributors to PM2.5 and ozone pollution.
Annual environmental tax revenue remains stable at over 20 billion yuan ($2.8 billion), serving as a green development tool for local governments.

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What Happened When

2016：: China’s Environmental Protection Tax Law was passed, incorporating only 18 types of VOCs previously subject to pollution fees.

2018：: China introduced its environmental protection tax, with the law taking effect and replacing the pollution fee system in place since 1979.

By October 28, 2025：: The decision to amend the Environmental Protection Tax Law was passed by China’s top legislature, authorizing the State Council to start pilot schemes to tax all VOC emissions.

October 28, 2025：: The amendment to the Environmental Protection Tax Law took effect immediately, allowing the expansion of the tax to cover all VOCs through pilot programs.

AI generated, for reference only