China will extend purchase tax breaks on new energy vehicles to the end of 2027, according to a statement issued by the Ministry of Finance, the State Taxation Administration and the Ministry of Industry and Information Technology on Wednesday.
The NEVs bought from Jan 1, 2024 through the end of 2025 will be exempt from purchase tax amounting to as much as 30,000 yuan ($4,172) per vehicle, while the tax on NEVs purchased between Jan 1, 2026 and Dec 31, 2027 will be halved, with the reduction to not exceed 15,000 yuan per car, the statement said.
The NEVs include pure electric vehicles, plug-in hybrid electric vehicles and fuel-cell vehicles. Before the extension, the current exemption of purchase taxes on NEVs was scheduled to expire by the end of this year.
The country first began exempting NEVs from purchase taxes in 2014, and this is the fourth time that the tax-exemption policy has been extended.
China's NEVs segment has witnessed rapid growth this year. Sales of NEVs in the country expanded 60.2 percent year-on-year to 717,000 units in May, data from the China Association of Automobile Manufacturers showed.
In the first five months, NEV sales increased 46.8 percent from a year ago to 2.94 million units, and NEV output totaled over 3 million units during this period, increasing by 45.1 percent year-on-year, the CAAM said.