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Study on Fiscal and Tax Incentive Policies for China’s Wind Power

China’s wind power resources mainly gather in the three northern areas (Northeast China, North China, and Northwest China). The state planned seven wind power bases of 10 million kw at the end of 2008, among which, six were located in remote backward areas of North China, without any superior industry. The development of wind power will become the main way for these areas to develop economy and expand employment. However, the VAT transition policies implemented as of 1 January 2009 allowed enterprises to deduct the input tax included in newly purchased machines and equipments, which reduced the local tax payments of wind farms remarkably. Meanwhile, since the development of wind power belongs to infrastructure project, the preferential enterprise income tax policy of three-year exemption and three-year half reduction accessible reduces the interests available for local government from the development of wind resource in the early stage. In order to benefit from the wind power development, some areas even require wind power development enterprises mandatorily to introduce wind turbine or spare parts manufacturers while developing wind farms locally. This practice has, on the one hand, aroused the local protectionism in wind turbine selection; on the other hand, formed the manufacturing of wind turbines bloomed almost everywhere, and caused the waste of investment and overcapacity. Therefore, in order to develop the wind resource better, research on wind power-related fiscal and tax policies is in urgent need. The constitution of reasonable and effective wind power-related fiscal and tax policies will offer policy guarantee to the massive development of wind power in the future.

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