(Yicai Global) Sept. 26 -- China will extend to the end of next year the policy of exempting new energy vehicles from purchase tax to support development of the NEV market, in the third roll-over of the policy since it was introduced eight years ago.
Battery electric vehicles, plug-in hybrid EVs, and fuel cell EVs on the purchase tax-free list will continue to enjoy exemption from a 10 percent sales levy through Dec. 31, 2023, according to a document released by the finance ministry today.
The tax relief started in September 2014 as part of government measures to promote the new energy passenger vehicle market and reduce carbon emissions.
In the first seven months of this year, the policy saved NEV buyers CNY40.7 billion (USD5.7 billion), a 109 percent increase from a year ago, according to figures from the State Taxation Administration.
Thanks to government incentives, NEV sales doubled last month from a year earlier to 529,000, data from the China Association of Automobile Manufacturers showed, with the NEV penetration rate jumping 11 percentage points to 28.3 percent.
China also unveiled an interim policy in May to promote auto sales. The nation will halve the purchase tax on passenger vehicles that meet certain conditions, including fossil fuel-powered vehicles, in the second half of this year. It has not yet decided whether or not to continue the policy after it expires.
Monthly sales of passenger vehicles with 1.6-liter to 2-liter engine capacity have jumped about 10 percent since the policy came into force in June, according to tax declarations on car purchases.
Editor: Peter Thomas