Tax Concessions to Energy Mgmt Firms

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Last updated: 22 Mar 2011

China offers tax concessions to energy management contracting projects


Starting from 2011, energy-saving service companies engaging in energy management contracting projects shall be eligible for concessions on value-added tax, business tax, enterprise income tax and other taxes.

The Ministry of Finance and the State Administration of Tax recently issued the Circular on Issues Concerning the Value-Added Tax, Business Tax and Enterprise Income Tax Policies for Promoting the Development of the Energy-Saving Service Sector with a view to encouraging enterprises to adopt the system of energy management contracts and strengthen technical transformation for energy conservation and emission reduction. The circular made clear the specific tax concessions for energy management contracting projects.

Qualified energy-saving service companies shall be temporarily exempt from business tax on taxable income derived from executing energy management contracting projects. When an energy-saving service company transfers its taxable goods from qualified energy management contracting projects to energy-consuming enterprises, the VAT arising therefrom shall be temporarily exempted.

To qualify for these exemptions, the relevant technologies of the energy management contracting project implemented by the energy-saving service company must meet the requirements specified in the General Technical Rules for Energy Performance Contracting promulgated by the General Administration of Quality Supervision, Inspection and Quarantine and the Standardisation Administration of China. The format and content of the Energy-Saving Benefit Sharing Contracts signed between energy-saving service companies and energy-consuming companies must comply with the relevant laws and regulations including the Contract Law and the General Technical Rules for Energy Performance Contracting.

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Posted: 22 March 2011, last updated 22 March 2011

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