Will new FEOC guidelines narrow the funnel for Chinese companies to qualify for IRA tax credits?

Policy & Regulation

Under the newly released guidance on foreign entity of concern (FEOC), a critical mineral extracted by an entity that is not an FEOC but processed by an entity that is an FEOC would not be eligible for tax credits under the Inflation Reduction Act (IRA) in the US. With this new ruling, it seems that another layer of FEOC requirements have been added to the existing funnel for mainland Chinese companies, making them explore new ways of participating in the US market

A little over 15 months after the US President Joe Biden signed the US Inflation Reduction Act (US IRA) into law, the government has released guidance on the foreign entity of concern (FEOC), further raising the eligibility criteria for electric vehicles to qualify for a total tax credit of $7,500.

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