Since the implementation of the "Resource Tax Law of the People's Republic of China" on September 1, 2020, a significant response is seen from the Chinese geothermal industry. Through the study of the law and the corresponding local implementation guidelines, it is found that there exist several conflicts between the current local implementation guidelines and the upper law. More specifically, when the resource tax is imposed on the amount of the reinjected geothermal water, such taxation practice will violate the upper law, against the third article of the principle of the tax on the amount of sales, as well as against the fifth article of the principle of the exemption on the self-usage for continuous production. These conflicts will very likely lead to judicial litigations and law suits in the future. With respect to the concept of"raw geothermal water"in the Resource Tax Law, and whether the reinjected geothermal water can be treated as a behavior of sales, the current legal definition is not clear enough. Moreover, the method of adopting the volume unit of the cubic meter as the taxation unit of the geothermal water will cause uncertainty and non-uniqueness in the measurement of taxable products in the geothermal electricity generation industry. In terms of policy recommendations, this paper proposes that the resource tax should be exempted on the reinjected geothermal water under the existing legal framework. At the same time, the definition of"raw geothermal water"needs to be clarified through judicial interpretation, and a revision process should be initiated to change the taxation unit of geothermal water to the mass unit of ton.

geothermal energy  /  Resource Tax Law  /  geothermal fluid reinjection  /  geothermal heating  /  geothermal electricity generation