China: China confirms electric car purchase tax exemption
04 September 2014
Posted by: Author: Mary Swire
Author: Mary Swire (Tax-news.com)
A statement from
the Ministry of Industry and Information Technology and State Administration of
Taxation has confirmed that China has introduced an exemption from the present
10 percent purchase tax for electric vehicles, with effect from September 1, 2014.
The new measure,
which was first announced in July this year, is being seen as a vital element
within the Government's environmental protection policies, by reducing China's
dependence on fossil fuels and cutting air pollution, but the tax break also forms
part of efforts to support the development of a Chinese new-energy automotive
industry and increase domestic demand for such vehicles.
On August 27, the
two agencies issued a notice that listed the make and model of the first 17
vehicle types to take advantage of the tax break. Those vehicles are from
domestic manufacturers, although, when the policy was first disclosed, it was
stated that the exemption will be available for all new-energy vehicles,
whether produced domestically or imported, to the end of 2017, and further
models are expected to be added to the list as the Ministry monitors the
success of the program.
It is hoped that
the Chinese car market, the world's largest at 18m, will see a total of at
least 5m environmentally-friendly vehicles on the roads by 2020. However, with
an estimated 16,500 new-energy cars being sold in the country in the first half
of this year, an increase from around 7,300 in the same period of 2013, sales
are still lagging far behind Government's target of 500,000 such vehicles on
Chinese roads by the end of next year.
The Government has
also offered various subsidies against the purchase price of new-energy
vehicles (not for imports) since 2010, reaching up to a price deduction of
RMB114,000 (USD18,550) for an electric vehicle in Beijing, and has recently
ordered public institutions to use more electric and plug-in hybrid cars.
In addition, it has
been reported that the Government is considering an additional tax on gasoline,
so as to try and shift Chinese consumers' continuing preference for
traditionally-fuelled cars, and counteract the low uptake of
environmentally-friendly vehicles caused by their high production cost and
price, even with the subsidy.
This article first appeared on tax-news.com.