(Beijing / China) – China has extended support for new energy vehicles (NEV). This also includes fuel cell cars. Accordingly, cars purchased between January 1, 2024 and December 31, 2025 are exempt from purchase tax. However, the amount of tax exemption cannot exceed 30.000 yuan (3.800 euros) per vehicle, one says Message of the Ministry of Finance (Notice No. 10 of 2023).
From 2026, purchase tax will be halved
For “new energy” vehicles purchased between January 1, 2026 and December 31, 2027, the purchase tax will be reduced by 50 percent. This tax reduction amounts to a maximum of 15.000 yuan per car. The date of acquisition is determined, among other things, “according to the date of issuance of valid documents”.
The exemption from motor vehicle tax applies to purely electric vehicles, plug-in hybrid vehicles and fuel cell vehicles. The paper also leaves no doubt about the type of vehicles eligible for funding: a “new energy-powered passenger car is a vehicle that is designed, manufactured and technically marked primarily for the transport of passengers and their luggage and/or temporary goods and has a maximum of nine seats, including the driver's seat. Vehicles that specifically benefit from the funding are listed in a catalog published by the authorities.
China wants to support the auto industry
The government wants to support, among other things, “the development of vehicles powered by new energies and automobile consumption,” according to the announcement. From January to December 2022, around 688.000 NEVs were sold in China. According to statistics from the China Association of Automobile Manufacturers (CAAM), this was almost double the previous year. From January 2023, however, there was a slump in sales figures of minus 6,3 percent compared to January 2022.
In order to promote the development of energy-efficient vehicles, China began exempting NEVs from purchase tax in 2014, according to the Chinese Evening Post. This preference originally ended in December 2017, but was initially extended until the end of 2020 and then until the end of 2022. In September last year, the government decided to extend the exemption from purchase tax for NEVs until the end of 2023, which has now been extended.
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Buyers of cars powered by “new energy” are currently saving on purchase tax in China. © Sinopec Group
