local time, the U.S. Treasury Department announced the implementation of a temporary rule to implement the relevant provisions of President Trump's new tax law. According to the rule, companies will be restricted from claiming federal clean energy subsidies if they rely too much on Chinese-made equipment.
According to the announcement, "prohibited foreign entities" include not only enterprises controlled or state-owned enterprises by foreign governments, but also enterprises directly or indirectly controlled or influenced by them (such as equity, appointment of directors or creditor's rights). At the same time, any substantial assistance provided by parts, materials, or labor from any of the above entities may affect the eligibility of the item or component for the tax credit.
Companies can track whether various components and materials are sourced from restricted entities according to the calculation rules provided by the Internal Revenue Service (IRS) to determine whether they are eligible for subsidies, or they can rely on cost share parameters provided by the IRS or compliance certificates issued by suppliers to simplify the judgment.
The US Treasury said the interim rules could be used as a basis for enforcement until formal regulations are in place, and that the government would seek public comment on subsequent guidance for 45 days.
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