The Environmental Protection Tax Law of the People's Republic of China was implemented on January 1, 2018 and each local government has to date released its criteria for the collection of environment tax to be levied soon.
The environmental law defines the rate of taxes to be levied on air and water pollutants. It is Yuan1.2 – Yuan12 on air pollutants (per pollution-equivalent unit), and Yuan1.4 on water pollutants (per pollution-equivalent unit). The pesticide industry causes serious waste, where production of one ton of pesticide results in tons of waste water, and the increase in environmental tax is expected to serve as a deterrent to the pesticide companies.
The emission permit license is mandatory and only eligible pesticide companies can apply for it. Companies not meeting the requirements will not be permitted to discharge any pollutants, which will be a huge challenge to the pesticide industry in China. According to the Chinese Ministry of Environmental Protection, until December 28, 2017, only 403 out of a total of 2,200 pesticide companies were issued the emission permit license, accounting for less than 22% of the total, and this is likely to create a tension in the supply side of the pesticide industry.
According to the 13th Five-Year Plan of the pesticide industry, the production of technical material is expected to become more centralized. By 2020, the number of pesticide companies will decrease by 30%. There is a goal to build five pesticide enterprises with sales reaching Yuan5 billion, and 30 pesticide companies with sales of Yuan2 billion. In the meantime, construction of new chemical industrial parks is on nationwide. The pesticide industry is expected to become more centralized in the future.