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Tax tool to promote green vehicles

The Ministry of Finance (MOF) announced Wednesday that China will promote the use of environmentally-friendly vehicles and ships by offering tax cuts.

Beginning at the start of the year, the country has decided to halve vehicle taxes for users of energy-saving cars and ships, according to a government document posted Wednesday on the MOF’s website.

Vehicle taxes for users of new-energy cars and vessels will also be removed, according to the document jointly released by the MOF, the Ministry of Industry and Information Technology (MIIT), and the State Administration of Taxation (SAT).

They have also publicized a list of the first batch of green vehicles eligible for the new policy. According to the list, qualified energy-saving passenger vehicles all have an engine size below 1.6 liters.

These more environmentally-friendly models are produced by companies including BYD, Chongqing Changan Automobile, Dongfeng Motor, and Shanghai GM.

Meanwhile, the document noted that new-energy vehicles eligible for having taxes removed include all-electric vehicles, plug-in hybrids, and fuel cell vehicles.

The new-energy vehicles on the list are non-passenger vehicles, and are produced by companies including China’s FAW, Geely, BYD, and Dongfeng Motor.

The document said that automakers and dealers of imported vehicles can apply to the MIIT to list their products or imported models that meet the requirements for tax reduction or removal.

The government will further issue lists detailing any models that suit the new rules, the document said.

Meanwhile, identifications for energy-saving and new-energy-powered ships have yet to be made, but will be released in the future, the document said.

The SAT said late last year that China would adjust its Vehicle and Vessel Tax Law in efforts to boost energy conservation and emission reduction. The newly-adjusted law, effective January 1, will levy moderately higher taxes on passenger vehicles with an engine size between 2 and 2.5 liters, as well as much higher taxes on those with an engine size above 2.5 liters.

Meanwhile, taxes on vehicles with engine capacities from 1.0 liter to 1.6 liters dropped from 360-660 yuan (57-104 US dollars) to 300-540 yuan per year. And taxes on vehicles with engine capacities of 1.6 liters to 2.0 liters dropped from 660-960 yuan to 360-660 yuan.

According to the SAT, the vehicle and vessel tax rate for users of passenger vehicles with an engine size below 1 liter ranges from 60 yuan to 360 yuan per year, while the tax rate can be as high as 5,400 yuan per year for passenger vehicles with an engine size over 4 liters.

China overtook the United States as the world’s largest auto market in 2009 after selling 13.64 million vehicles that year. Both car sales and production volume witnessed astonishing growth in 2009 and 2010 before slowing to a 2.4-percent growth rate in 2011 with the conclusion of stimulus policies.

The country still remains the world’s largest auto market. Car sales last year hit 18.5 million units.

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