China’s MIIT to conduct study on whether to extend NEV purchase tax exemption

Shanghai (Gasgoo)- Xin Guobin, vice minister of China's Ministry of Industry and Information Technology (MIIT), said on Tuesday at a press conference that a study would be made as soon as possible on whether to continue the preferential tax policy for new energy vehicle (“NEV”) purchase, which is supposed to be terminated by the end of this year.

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

Wuling Hongguang MINIEV; photo credit: SGMW

To support the development of NEVs, China first began exempting NEVs from purchase tax in 2014. The policy originally expired at the end of 2017, but was extended to the end of 2020 before it expired.

In April 2020, the government announced it would once again extend tax exemptions on NEV purchases by an additional two years to better promote the sector's development and boost auto sales.

Mr. Xin also added that the MIIT would optimize the management approach for the “NEV Dual Credit Policy”, step up the efforts to make breakthroughs in the new systems of batteries and in-car operating system, and inititate the pilot project on full vehicle electrification in public service fields.

For the first five months of 2022, China's auto output and sales dropped 9.6% and 12.2% year on year to 9.618 million and 9.555 million units respectively, according to the data by the China Association of Automobile Manufacturers (CAAM). Nevertheless, the NEV sector still defied against the overall downturn with its year-to-date production and sales volumes surging 114.2% and 111.2% respectively from a year ago.