China gives tax boost to distributed PV power generation

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Chinese tax authorities will in July introduce measures designed to ease the tax burden on distributed PV power generation.

The government is seeking ways to promote distributed PV power generation projects, and from July 1 will ask all buyers of distributed PV power – which are mainly companies owned by the State Grid Corporation of China – to invoice power generators.

This simplified purchase procedure lessens the tax burden on all parties, making power transactions easier and, in most cases, less expensive. The decision by the State Administration of Taxation is intended to boost the installation of distributed PV power projects by stripping away the often-arcane taxation laws that have been known to cripple development in the sector.

Currently, most producers of distributed power are non-enterprise entities and individuals that have traditionally experienced such difficulties with the taxation process.

A further change sees electric power companies permitted to collect value-added taxes from PV power producers on behalf of the authorities whenever monthly revenues exceed 20,000 yuan ($3,252).

China’s distributed solar power sector is a growing portion of the country’s PV industry. With 800 MW added last year, the distributed PV sector of China now accounts for 3.1 GW, with the majority of projects adopted by hospitals, schools, communities and government offices that are permitted to sell any excess electricity they have generated after self consumption.

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