China’s Ministry of Finance said the country will remove import duties and value added taxes on key technological equipment, including machinery used to generate wind and hydro power.
The policy, which came into effect on 25 April 2010, will adjust import duty-free application conditions for ancillary components for wind turbines as well as computer numerical control systems and components, excluding wind turbines, according to a statement by the ministry on its website.
The wind turbine makers eligible for import duty benefits on turbine components are required to produce wind turbines with capacities of 1.5MW and above, and have annual sales exceeding 300MW, without taking sales of turbines with more than 2.5MW of capacity into account.
Turbine component manufacturers that apply for zero import duty are also required to provide ancillary components for wind turbines with a capacity of 1.5MW and above. They must sell at least 300 or 100 sets of blades or generators for wind turbines each year respectively.
China will not eliminate import duties and value added taxes for companies that import wind turbines with a capacity of 3MW or lesser.
Large hydroelectric equipment producers are also entitled to the removal of import duties and value added taxes. The Chinese government has made capacity requirements on five types of hydropower equipment.
The companies must submit applications by 25 May to enjoy the tax incentives. Provincial industry and information technology departments as well as local customs and finance divisions will conduct initial assessments, and then summarise their preliminary views and application documents and submit reports to the Ministry of Industry and Information Technology, in conjunction with Ministry of Finance, the Customs, and the State Administration of Taxation by 10 June.
Prior to the import duty-free rules, the rates of import duty were 8% and 3% on the wind turbines and ancillary components from countries under the Free Trade Agreement respectively.
Both wind turbines and ancillary components from other nations have the same import duty rate of 30%. The new rules are in line with the Chinese government’s decision last November to ease the requirement that most of the components for wind power equipment be made locally, and to regard products made in China by foreign companies as domestic-made items.
The import duty-free guideline for wind equipment makers may benefit several companies in China and abroad. Finnish wind gear manufacturer Moventas plans to provide gears to the newly-developed 3MW turbines of China’s Dongfang New Energy Equipment, a subsidiary of Dongfang Electric.
Massachusetts-based American Superconductor is supplying electrical control systems for wind turbines to Chinese wind turbine maker Sinovel, and CSR Zhuzhou Electric Locomotive Research Institute as well as new entrant XJ Group and Shenyang Blower Works. Swedish bearing manufacturer SKF is delivering main shaft bearings and sealing systems to Sinovel’s 3MW wind turbines.
