Tax Breaks for Some New Energy and Fuel-Efficient Vehicles to End in 2027

The Ministry of Finance, the State Taxation Administration, and the Ministry of Industry and Information Technology jointly issued an announcement clarifying that, effective January 1, 2027, the policy halving the vehicle and vessel tax for energy-saving vehicles will be abolished. Simultaneously, the exemption from vehicle and vessel tax for battery electric commercial vehicles, plug-in (including range-extended) hybrid electric vehicles, and fuel cell commercial vehicles will also be terminated. This adjustment marks the first major change to the vehicle and vessel tax system since its implementation 15 years ago. From that date onward, both new and existing vehicles will be subject to uniform taxation, with no further eligibility for the aforementioned preferential treatments. Vehicles already listed in either the "Catalogue of Energy-Saving Vehicles Eligible for Vehicle and Vessel Tax Reductions" or the "New Energy Vehicle Catalogue" will continue to enjoy their original tax reduction or exemption benefits regardless of whether ownership has been transferred. Regarding specific tax rates, commercial passenger vehicles with approved seating capacities of more than nine persons will be taxed per vehicle at an annual rate ranging from RMB 480 to RMB 1,440. Commercial freight vehicles will be taxed based on their curb weight, at a rate of RMB 16 to RMB 120 per ton. The exact applicable tax rates within these ranges will be determined by the people's governments of provinces, autonomous regions, and municipalities directly under the central government. Battery electric passenger cars and fuel cell passenger cars are not subject to vehicle and vessel tax, as they lack engine displacement and thus fall outside the scope of taxation stipulated by the Vehicle and Vessel Tax Law. Consequently, they remain unaffected by this policy adjustment and will continue to be exempt from the tax.