China announces extension of purchase tax break on NEVs until 2027

BEIJING/SHANGHAI (Reuters) – China on Wednesday announced an extension of a purchase tax break on new energy vehicles (NEVs), a new pillar of the economy whose muted recovery has seen market watchers calling for more stimulus.

The purchase tax on NEVs bought between Jan. 1, 2024 and the end of 2025 will be exempted, with the amount of exemption not exceeding 30,000 yuan ($4,168), the Ministry of Finance said in a statement.

The tax on NEVs purchased between 2026-2027 will be halved, the ministry said.

The current policy allows purchase tax exemption on NEVs, which include all-battery electric vehicles (EVs), plug-in petrol-electric hybrids and hydrogen fuel-cell vehicles, until the end of 2023.

($1 = 7.1972 renminbi)