China Approves Preferential Tax Policy to Encourage Wind Power

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Last updated at: (Beijing Time) Monday, April 29, 2002

China Approves Preferential Tax Policy to Encourage Wind Power

China announced Monday that it will reduce by half the value-added tax levied on wind-generated electricity to encourage development of the industry.

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China announced Monday that it will reduce by half the value-added tax levied on wind-generated electricity to encourage development of the industry.

According to the new taxation policy approved by the State Council, the average price of wind power will decrease by 0.05-0. 06 yuan per kilowatt, and that in newly-built wind power plants is expected to drop to below 0.5 yuan per kw. Insiders believe this move will exert a positive influence on the development of China's wind electricity sector.

The State Economic and Trade Commission (SETC), which proposed the policy, said that China ranked first in the world in wind energy resources, and had great potential for commercializing the sector. However, wind power is more costly than coal or hydropower, which has hindered its development.

Wind power plants do not need to buy fuel, so 85 percent of the total cost is fixed asset investment, which, according to China's current value-added tax policy, cannot be deducted. The SETC said that accounted for wind power's high cost. After investigation, it coordinated with the Finance Ministry and the State Administration of Taxation to put forward the preferential policy.

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