China Extend Tax Cut on Small Engines

China will extend a tax cut on small-engine vehicles to 2017, rather than allowing it to expire at year’s end as planned, two sources with knowledge of the matter told Reuters on December 14. It is unclear how much the rate will be reduced from the normal vehicle purchase tax of 10% under the extension. The government slashed the tax to 5% for vehicles with 1.6 liter engines and below in October 2015. This is likely to prompt many carmakers to pursue smaller engines into the 2017-18 financial years and also helps electric and hybrid vehicle production in the country.