Major Adjustment to Vehicle and Vessel Tax Policy: End of Incentives for PHEVs and Commercial EVs in 2027

[Policy Adjustment] The 15-year vehicle and vessel tax incentive ends; certain new energy vehicles will be subject to taxation starting in 2027.

Key Development: Plug-in hybrids, range-extended EVs, and electric commercial vehicles no longer exempt

Starting January 1, 2027, the Ministry of Finance and two other departments will eliminate the vehicle and vessel tax exemption for pure electric commercial vehicles, plug-in hybrid vehicles (including range-extended models), and fuel cell commercial vehicles. The concurrent 50% reduction for fuel-efficient internal combustion engine vehicles will also be phased out. Both existing and newly registered vehicles will be taxed at the full standard rate, including those registered before 2026.

Strategic Rationale: Phased policy withdrawal following industry maturity

This adjustment marks the most extensive and far-reaching change since the vehicle and vessel tax incentives were first introduced in 2012. Initially implemented to support the growth of new energy and fuel-efficient vehicles, these preferential policies are now being withdrawn as the industry has matured and achieved global leadership.

Industry Impact: Pure electric passenger cars retain tax exemption benefits

Notably, pure electric passenger cars and fuel cell passenger cars were never subject to vehicle and vessel tax, so the new policy does not affect them—they remain exempt. This move may further reinforce consumer preference for pure electric vehicles.