Shanghai (ZXZC)- China will exempt the vehicle purchase tax on new energy vehicles (NEVs) purchased from Jan. 1, 2021 to Dec. 31, 2022 to boost automobile spending, according to an announcement jointly issued by China's Ministry of Finance, State Taxation Administration and Ministry of Industry and Information Technology (MIIT) on April 16.

(BAIC EU5, photo source: BAIC BJEV)

According to China's policy, NEVs hereby refer to all-electric vehicles, plug-in (including extended-range) hybrid vehicles and fuel cell vehicles.

The NEVs available for the tax exemption should be included in a catalogue released by the MIIT and the State Taxation Administration, and consumers who buy the eligible vehicles on or after the issuance date of the catalogue can enjoy the preferential policy. The date showed on automobile sales invoices or other valid certificates is adopted as the purchase date.

Regarding the NEVs that has been listed on the catalogue, their manufacturers or imported vehicle dealers can apply for the tax exemption when submitting paperless automobile information, which will then be checked by the MIIT and handed over to the State Taxation Administration for the final approval.

The authorities also make clear that automobile enterprises should ensure the consistency of the product and paperless information.

China has undergone a prolonged downturn in NEV sales due to the substantial subsidy reduction since mid-2019. Hit by the coronavirus outbreak, NEV sales for the first quarter plunged 56.4% year on year to 114,000 units, according to the China Association of Automobile Manufacturers (CAAM). To help the industry weather the crunch, Chinese central and local governments have successively rolled out incentives to spur sales. One of the most important excitements is the two-year extension for NEV subsidy announced by the State Council on March 31, which was supposed to be entirely cancelled by the end of 2020.