China to extend sales tax exemption for NEVs to 2023

The Chinese government wants to continue the purchase tax exemption for New Energy Vehicles (BEVs, FCEVs and PHEVs) in 2023. The purchase tax exemption for NEVs in China has been in place since 2014, and with its continuation the government wants to further support the growth of the industry.

The purchase tax exemption has been extended several times over the years, most recently until the end of 2022. Compared to a similarly priced combustion model, NEV customers save about 10,000 yuan or the equivalent of 1,450 euros. The extension was decided at a meeting of high-ranking government officials.

The report in the CN EV Post does not yet provide details on the 2023 regulation. However, the procedure is likely to remain the same: The exemption will not be granted automatically, but the models concerned must be included in a catalogue published by the MIIT and the tax administration. Officially, the reason given is that consumers should be able to find out which vehicles are eligible. With this step, however, the authorities also reserve the right to exclude some vehicles from the tax regime. For the models listed in the catalogue, the manufacturers or importers can apply for the tax exemption, which will then be checked again by the MIIT and, in a final step, approved by the competent tax authority.

The fact that the purchase tax exemption for BEVs, PHEVs and FCEVs will be extended again had already been expected in the Chinese media – especially against the background of the lowered purchase tax for internal combustion vehicles. In order to support the economy, the purchase tax will be halved from ten to five per cent for all internal combustion vehicles with an engine capacity of less than two litres and a price of less than 300,000 yuan (43,325 euros) purchased between 1 June and the end of the year.

The purchase tax is only one element of China’s eMobility promotion. The more important and often discussed instrument is government subsidies as a purchase premium. This premium has been reduced again and again, which in some cases has had enormous consequences in terms of demand – for example in mid-2019. Originally, the subsidy was supposed to expire at the end of 2020, but was extended until the end of 2022 as part of the Chinese government’s Corona stimulus package. There is no word yet on a successor scheme for 2023 here.

With the current regulations, NEV sales reached a record high in June. With a cumulative total of 571,000 BEVs, PHEVs and FCEVs, June significantly surpassed the previous record month of December 2021 (505,000 NEVs).


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