China Taxes and incentives for renewable energy KPMG Global Energy & Natural Resources.
Corporate Income Tax (CIT)
In November 2011, the government authority expanded the scope of sales of self-produced goods/products by using the prescribed recycled materials, waste residuals and agricultural residuals that are eligible for VAT refund at rates ranging from 50 to 100 percent of the VAT payable. The rates may vary depending on the nature of recycled materials or residuals utilized.
As of 1 April 2013, the taxpayer is further required to meet the local/national pollutant emission requirements in order to receive the VAT incentive for self-produced goods/ products from recycled materials.
As of 1 January 2012, qualified energy efficient vehicles and vessels enjoy a 50 percent Vehicle and Vessel Tax deduction. Qualified new energy (mainly electric) vehicles and vessels may be exempted from Vehicle and Vessel Taxes.
From 1 September 2014 to 31 December 2017, new energy vehicles purchased will be exempted from Vehicle Purchase Tax.
With the revised Renewable Energy Law that came into effect in April 2010, the State Bureau of Energy and other departments of the State Council will promulgate guidelines on the full purchase of electricity generated by new energies. According to the revised law, the price of on-grid electricity generated by renewable energies shall be determined by the competent price department of the State Council. The council will consider the difference in areas and the electricity generated by different types of renewable energy companies.
Special funds are made available to facilitate the development of renewable energy relating to the following activities:
The special funds may also be deployed as compensation for the higher costs charged by renewable energy plants and indirectly borne by the grid for the purchase of electricity from these plants. Applicants may apply for such funds with the local finance bureaus and the government agencies in charge of renewable energy projects.
During the State’s 12th Five-Year Plan period, the central government will continue to arrange special subsidies to support the projects to improve the energy conservation technologies.
The financial subsidies for energy conservation will support the following activities:
The allocation of the financial subsidies for energy conservation is closely linked to the nature, goals, investment, achievements and utilization levels for energy conservation. The allocation methods of financial subsidies include direct allowances, bonus, interest discount and reimbursement on the actual costs basis.
To promote the development and utilization of renewable energy, financial subsidies are granted to the following activities:
The amount of subsidies granted is subject to the nature, goals, investment and utilization level for renewable energy activities. The distribution methods for financial subsidies include competitive allocation, factor allocation and reimbursement on the actual cost basis.
The guidelines for quotas in the renewable energy sector have been included in the work plan of the State Bureau of Energy and are expected to be issued by 2015.