Page 97 - Research on Financial Development Mechanism and Path of Forestry Carbon Sequestration in Developing Countries under Double Carbon Targets

Chapter 2 Forestry Carbon Sequestration and Carbon Finance

reaching the peak targets in key areas and key industries, appropriately compact the re-
sponsibilities of local governments, and ensure the stability and sustainability of carbon
trading. Fourth, identify the trading parties in the carbon market and carry out relevant
capacity building. We will further clarify access, encourage experienced financial in-
stitutions, carbon asset management companies, third-party advisory bodies and even
individuals to participate in carbon market transactions, and drive innovation in carbon
financial products, thus creating a favorable situation for the whole people and society
to push forward the “30.60” target in Qi Li.

2.4.2 Policy support and regulation building
1) Tax incentives
Vat. In the production phase, in view of the fact that the majority of forestry carbon
sequestration projects are state-owned farms and lack of participation of forest farmers,
it is suggested to refer to the preferential value-added tax policy for agricultural prima-
ry products, exempt from value-added tax in the production phase of forestry carbon
sequestration, encourage family forest farms and forestry professional cooperatives to
participate in forestry carbon sequestration projects, and fully mobilize the enthusiasm
of forest farmers to participate. In the trading link, forestry carbon sequestration prod-
ucts enter the trading market and face the problem of how to offset the input tax due to
the tax exemption in the initial link. It is suggested to draw lessons from the value-add-
ed tax policy of financial commodity transfer, adopt the method of difference deduc-
tion, simplify the internal circulation procedures in the market, and issue invoices in the
trading market when exiting the trading market to ensure the integrity of the value-add-
ed tax chain in the subsequent links. In the use phase, there are currently three types of
users of forestry carbon sinks: first, enterprises included in the carbon emission quota
management list, second, enterprises not included in the list, and third, public welfare
users. The listed enterprises have paid the corresponding emission costs for purchas-
ing carbon sinks due to quota overruns and other reasons, and should be allowed to
deduct the corresponding input tax when calculating the tax. If they directly purchase
duty-free products, they can deduct them with reference to agricultural products; Off-
list enterprises use carbon sinks as commodity circulation investments and other pur-
poses, which should be included in the normal circulation of commodity purchases and
sales; For the public welfare purchasers, they are neither required for their own use nor
used as investment for commodity circulation, but they contribute to reducing carbon
emissions by purchasing carbon sinks. They may consider crediting the input tax of this

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