Ministry of Finance: The Total Scale of Vehicle Purchase Tax Reduction and Exemption Will Reach RMB 520 Billion from 2024 to 2027

On June 21, the State Council policy briefing was held at the State Council Information Office to introduce the situation of promoting high-quality development of new energy automobile industry.

Xu Hongcai, vice-minister of Ministry of Finance, introduced the policies unveiled by Ministry of Finance for development of NEV industry, including the policy of exempting purchase tax for NEVs from September 1, 2014 with the approval of the State Council. The policy has been extended to December 31, 2023 for three times in 2017, 2020 and 2022. By the end of 2022, China had exempted purchase tax of over RMB 200 billion under the policy. It is expected to exempt the tax of over RMB 115 billion in total in 2023. Moreover, China also exempts vehicle and vessel tax for NEVs, and exempts sales tax for pure electric vehicles.

China has also decided to extend the policy of exempting and reducing purchase tax for NEVs to the end of 2027 to further consolidate and expand the development of the NEV industry. It is roughly estimated that the amount of tax reductions and exemptions from 2024 to 2027 will reach RMB 520 billion.