1. Preferential income tax for CDM projects

The Notice on Corporate Income Tax Policies for China's CDM Funds and CDM Project Implementation Enterprises (Caishui [29] No.3) jointly issued by the Ministry of Finance and State Taxation Administration of The People's Republic of China, for the first time, clarified some preferential income tax policies for CDM projects in China, which will further promote the development of CDM market in China.

in order to support domestic efforts to cope with climate change at different levels and promote the development and implementation of clean development mechanism projects, China established the China Clean Development Fund Management Center in 27, which is responsible for the collection, collection, management and use of funds. With regard to the Clean Development Fund, Article 1 of Caishui [29] No.3 clearly stipulates that four types of income obtained by the Clean Development Fund shall be exempted from enterprise income tax, namely, the part of the transfer income of greenhouse gas emission reduction from CDM projects turned over to the state, the grant income from international financial organizations, the interest income from the deposit of fund funds, the interest income from the purchase of government bonds, and the donation income from domestic and foreign institutions, organizations and individuals. It should be noted that the above four types of income are not all sources of China's clean development fund at present, and other sources of clean funds, such as the operating income obtained by fund management centers from fund business, should still pay enterprise income tax in accordance with regulations.

2. The preferential policies for enterprise income tax enjoyed by CDM project implementation enterprises mainly include two aspects:

First, the national income paid by CDM project implementation enterprises is allowed to be fully deducted before tax. The greenhouse gas emission reduction resources are owned by the government of China, while the greenhouse gas emission reduction generated by specific clean development mechanism projects is owned by the development enterprises. Therefore, the gains from the transfer of greenhouse gas emission reduction in clean development mechanism projects are owned by the government of China and the enterprises implementing the projects. The Measures for the Administration of Clean Development Mechanism Project Operation (Order No.37 of the National Development and Reform Commission, Ministry of Science and Technology, Ministry of Foreign Affairs and Ministry of Finance) defines the distribution ratio of greenhouse gas emission reduction transfer amounts of different CDM projects between the state and the implementing enterprises. Paragraph 1 of Article 2 of Caishui [29] No.3 stipulates that the portion handed over to the state by CDM project implementing enterprises according to the above ratio is allowed to be deducted when calculating the taxable income, namely:

1.

2. nitrous oxide (N2O) projects, accounting for 3% of the transfer income of greenhouse gas emission reduction;

3. The key areas and afforestation projects specified in Article 4 of the Measures for the Administration of CDM Project Operation account for 2% of the transfer income of greenhouse gas emission reduction.

Second, enterprises implementing CDM projects can enjoy the preferential policy of "three exemptions and three reductions". For the enterprises that implement CDM projects such as HFC, PFC and N2O that are turned over to the national greenhouse gas emission reduction transfer income according to the specified proportion, the document Caishui [29] No.3 stipulates that the income from the implementation of such CDM projects by enterprises shall be exempted from enterprise income tax from the first year to the third year, and the enterprise income tax shall be halved from the fourth year to the sixth year. The income from enjoying this preferential policy refers to the net income after deducting the part turned over to the state from the greenhouse gas emission reduction transfer income obtained by enterprises in implementing CDM projects, and then deducting the related costs and expenses incurred by enterprises in implementing CDM projects.

it should be noted that enterprises should separately account for the income of CDM projects that they enjoy preferential treatment, and reasonably share the expenses during the relevant period. Without separate accounting, they may not enjoy the above preferential enterprise income tax policies. In addition, the first CDM transaction took place in China in 25. At present, the relevant agreements are valid from 28 to 212, and the document Caishui [29] No.3 was implemented from January 1, 27. Therefore, the enterprises implementing CDM funds and CDM projects should adjust their taxable income in 27 according to the provisions of this document.

3.CDM projects do not involve turnover tax

The cooperation fields of CDM projects between China and developed countries involve various ways, such as sanitary landfill and comprehensive recycling of municipal solid waste, or large-scale afforestation, grassland construction and management, or the use of clean energy such as water conservancy, wind energy and solar power generation. Then, is it necessary to levy turnover tax on the money collected by Chinese enterprises from foreign enterprises or organizations in CDM project cooperation according to the different projects of cooperation between the two parties and the forms of labor services provided by China enterprises in this project? There is no clear document provision at present. However, under the current policy, the money collected by Chinese enterprises from foreign enterprises or organizations in the implementation of CDM projects does not involve turnover tax.

firstly, for the money collected by China enterprises from foreign enterprises or organizations in CDM project cooperation, turnover tax cannot be levied in the form of labor services provided by China enterprises in this project. In the CDM project of cooperation between China and foreign countries, foreign enterprises only provide financial and technical support for the cooperative project, and they provide financial and technical support to China enterprises only for the purpose of obtaining the greenhouse gas emission reduction generated by the project, not for obtaining the services provided by China enterprises engaged in the project. That is to say, foreign enterprises are not the recipients of services provided by China enterprises in the CDM projects they cooperate with. Therefore, turnover tax cannot be levied on the money collected by China enterprises from foreign enterprises according to the sales of taxable services. Then, should the funds provided by foreign enterprises or organizations be regarded as the extra-price fees charged by enterprises for providing the above-mentioned services and incorporated into their labor sales to collect turnover tax? In fact, whether it is the Provisional Regulations on Value-added Tax or the Provisional Regulations on Business Tax, the "extra-price fees" that should be incorporated into the sales tax are collected from buyers, not including the money collected from units or individuals other than buyers. Therefore, the funds collected by Chinese enterprises from foreign enterprises or organizations can not be regarded as "extra-price expenses" collected for providing taxable services with turnover tax, and they can be incorporated into sales to levy turnover tax.

second, the money collected by China enterprises from foreign enterprises in CDM projects cannot be taxed as "sales of greenhouse gas emission reduction". Although legally speaking, "greenhouse gas emission reduction" has become a tradable commodity in the international market, according to China's current turnover tax laws and regulations, it cannot be classified as a taxable asset of turnover tax. According to the Notes on Business Tax Items, the "transfer of intangible assets" belonging to business tax taxable items include the transfer of land use rights, trademark rights, patents, non-patented technologies, copyrights and goodwill, and the "greenhouse gas emission reduction" obviously does not belong to any kind of "intangible assets" here. The goods in value-added tax refer to "tangible movable property", and "greenhouse gas emission reduction" obviously does not belong to the taxable goods of value-added tax. Therefore, even if the "greenhouse gas emission reduction" generated by CDM cooperation projects between Chinese and foreign enterprises is regarded as an asset, there is no basis for levying turnover tax on it according to the current tax law.