On the morning of November 1, 2022, CIDA and King&Capital held an Inflation Reduction Act (IRA) 2022 briefing via offline meeting and online video.
The Inflation Reduction Act ("IRA"), with a total value of $750 billion, was signed into law by President Joe Biden on August 16, 2022, and the full text of the IRA is 273 pages long, with provisions for energy security and climate change, healthcare reform, tax and drug reform, and more. and drug price reform. One of the things that caught the attention of many Chinese new energy companies is that the IRA introduces a number of incentives in the field of new energy, including a plan to invest nearly $400 billion to focus on supporting the development of clean energy industries such as photovoltaics and electric vehicles.
At the request of a number of new energy enterprise members, CICC organized this IRA interpretation meeting and invited King&Capital to share the content and impact of the bill. More than 100 representatives of new energy industry enterprises from many member organizations of CICEA participated in this interpretation meeting, including solar photovoltaic industry enterprises such as LONGi Green Energy and electric vehicle industry enterprises such as Azera Motors.
The meeting was hosted by Wang Kewen, Deputy Secretary General of China Association for Overseas Development of Industry (CAODI). Mr. Zhang Libin, the foreign-related business managing partner of King&Capital, and Mr. Gao Huiyun, the senior consultant of tax law, interpreted and analyzed the bill, and Mr. Yuan Haiyang, the chairman of Grape Solar, shared the case study. After the meeting, Mr. He Zhenwei, President of China Association for Overseas Development of Industry (CAODI), Mr. Wang Kewen, Deputy Secretary General of CAODI, Mr. Chu Changzhi, CEO of King&Capital Law Firm and Mr. Zhang Libin attended the member awarding ceremony and had an in-depth and extensive communication on the success of the interpretation meeting and the future cooperation between the two parties.
The purpose of this seminar is to serve the member enterprises of CCAA to help them better understand the IRA and discuss the impact of the Act on the new energy field in China
Mr. Zhang Libin firstly introduced the legislative background and process of IRA, made a detailed introduction to the main content and overall framework of the bill, and made a detailed analysis of the impact of IRA on Chinese enterprises in two aspects.
On the one hand, for some Chinese enterprises, especially private enterprises, which have plans to invest in the U.S., the incentives provided by the IRA to investors create opportunities for cooperation between the U.S. and China. Since IRA incentives in the field of new energy may be effective in reducing greenhouse gas emissions, the IRA may have a catalytic effect on further cooperation between the U.S. and China in the fight against climate change and the implementation of environmental protection in order to promote the friendly development of U.S.-China relations.
On the other hand, some of the tax credit incentives in the IRA require that only products manufactured in the U.S. can enjoy the incentives, a move criticized by German commentators as a clearly discriminatory practice.This discriminatory requirement in the IRA may adversely affect enterprises around the world engaged in the new energy sector, especially in the photovoltaic industry and the electric vehicle industry, and the competitiveness of China's exports of new energy products in the U.S. market may be reduced. The competitiveness of China's exported new energy products in the U.S. market may also be reduced. Therefore, Mr. Zhang believes that Chinese new energy companies should pay attention to and actively respond to the impact of the IRA on the global new energy sector and make long-term arrangements for their global development.
Mr. Gao Huiyun explained in detail the IRA incentives in the energy sector, which are mainly divided into two categories: tax credits for taxpayers and grants to government agencies to finance specific projects. As a senior tax advisor, Ms. Gao introduced the IRA tax incentives in detail from a tax perspective, which mainly introduced the tax credits related to the clean power industry such as solar photovoltaic and the electric vehicle and its battery industry, and provided relevant concrete examples to demonstrate how the specific tax credits should be calculated.
Mr. Zhang and Mr. Gao's in-depth interpretation of the bill triggered a lively discussion among the representatives of the participating enterprises, who raised their own concerns. Mr. Zhang and Mr. Gao gave in-depth and detailed answers to these questions, and focused on the specific impact of IRA on the export and investment of Chinese enterprises.
Mr. Zhang Libin
Partner-in-Charge of Foreign Affairs Department
Mr. Zhang graduated from the University of Texas at Austin School of Law in 1997 with a J.D. degree and is licensed to practice law in New York State and China. Mr. Zhang has more than 25 years of experience practicing in international law firms and multinational corporations in the U.S. Mr. Zhang has received rigorous training as a common law attorney and has provided legal services to a number of Chinese companies for overseas investments in the energy industry and dispute resolution, has represented major oil and gas projects in investment and major cases in arbitration and litigation, and has extensive experience in foreign-related negotiations and overseas court appearances. He is also an arbitrator of the Arbitration Institutes of DITC, Bei Zhong, Hong Kong Zhong and OHADA Africa, specializing in energy arbitration cases. He has also served as General Counsel and Chief Compliance Officer of the Neo Group, assisting in the establishment of the compliance system of the Group and its various segments, and is currently focusing on overseas compliance counseling for Chinese companies. He was also one of the drafters of the recently promulgated Chinese national standard for compliance, GB/T35770-2022 (Compliance Management System - Requirements and Guidelines for Use).
In terms of industry honors, Mr. Zhang has been awarded the Chambers Impact General Counsel 2020 Award, and has been recognized as a Leading Lawyer in Projects & Energy by The Legal 500, a leading legal rating organization in the U.K., for 2019. In 2017 and 2018, Mr. Zhang was recognized by The Legal 500 Asia Pacific as a leading lawyer in the field of projects and energy, and by the Asia Pacific Law Bulletin (ALB) as one of the top 20 lawyers preferred by clients in 2017, and by The Legal 500 Asia Pacific as a leading lawyer in the fields of corporate/M&A and projects and energy, and by LEGALBAND as a leading lawyer in the field of energy and environment in 2016.
King&Capital Law Firm Foreign Affairs Department
King&Capital's Foreign Law Department not only continues to be a leader in the field of cross-border dispute resolution, but also has extensive project experience in the field of offshore investment, financing and mergers and acquisitions (M&A), resources and new energy, and regulatory compliance, providing a full range of high-standard legal support and services to domestic and foreign energy companies, including legal services for investment and mergers and acquisitions, and representation in investment disputes of energy projects. The Foreign Affairs Department has set up a new energy/ESG research team to provide Chinese new energy companies with comprehensive and effective legal services that are relevant to the industry. The main partners of the Foreign Law Department have more than 15 years of practice experience, and eight of the full-time attorneys and outside counsel hold doctoral degrees, two of whom hold J.D. degrees, while the others hold master's degrees. They have extensive knowledge of overseas cultural backgrounds and foreign legal environments, and have established attorney cooperation networks with local attorneys in many countries, enabling them to provide the highest quality and comprehensive solutions for Chinese corporate clients' overseas investments, compliance affairs management and dispute resolution.
