The Chinese government has announced it will extend a tax break that will help electric vehicle (EV) owners reduce the cost of purchasing of their electric cars until the end of 2023. The tax break was first introduced in 2014 and was set to expire at the end of 2022.
According to China’s Ministry of Finance, State Taxation Administration and Ministry of Industry and Information Technology (MIIT), qualifying new energy vehicles (NEVs) purchased between January 1, 2023, and December 31, 2023, will be exempt from vehicle purchase taxes.
Qualifying vehicles includes pure electric vehicles, plug-in hybrid (including extended-range) vehicles, and fuel-cell vehicles. An exact list is expected to be published soon.
The government said the decision to extend the tax exemption was made to help maintain the growth of the EV market segment in the country, which has faced a number of headwinds in recent years due to COVID-19 and ongoing supply chain problems.
The purchase tax exemption has proven popular with the government providing 40.7 billion yuan (~CAD$8 billion) worth of exemptions from January to July of this year alone. That is an increase of 108.5% compared to the same time period in 2021, according to data from Xinhua.
The government says this extension should provide another 100 billion yuan (~CAD$19 billion) worth of exemptions.
This is not the first time China has extended the tax break. The policy was originally implemented in 2014 and intended to help the burgeoning EV industry in China at the time. The policy was first set to expire in 2017, but was later extended to the end of 2020.
There were a few months that the country was without the tax break, until it was reimplemented in March 2020 and set to last until the end of 2022.