China will eliminate vehicle and vessel tax exemptions for pure electric, plug-in hybrid, and fuel cell commercial vehicles from 1 January 2027. Â
China is eliminating vehicle tax exemptions for pure electric, plug-in hybrid, and fuel cell commercial vehicles starting 1 January 2027. This decision has been made through Announcement No. 19 of 2026 on the Vehicle and Vessel Tax reduction and exemption for energy-saving and new energy vehicles, jointly issued by the State Taxation Administration, Ministry of Finance, and Ministry of Industry and Information Technology on 2 July 2026.
Tax exemptions ending
Effective 1 January 2027, three categories lose their existing tax relief. Pure electric commercial vehicles, plug-in hybrid vehicles (including range-extended models), and fuel cell commercial vehicles will no longer be exempt from vehicle and vessel tax. Energy-saving vehicles that previously paid half the standard rate will now pay in full. The change applies to vehicles acquired on or after 1 January 2027, as well as those purchased before the law takes effect.
Legal framework
The repeal formally removes Articles 1, 2(1) and (2), 3, 4, and 7 from the Notice of the Ministry of Finance, State Taxation Administration, Ministry of Industry and Information Technology, and Ministry of Transport on Preferential Policies for Energy-Saving and New Energy Vehicles and Vessels (Cai Shui [2018] No. 74). Taxpayers must now pay vehicle and vessel tax according to the standard Vehicle and Vessel Tax Law of the People’s Republic of China and its implementing regulations.
Anyone purchasing these vehicle types after the start of 2027 faces the full tax bill.
