Can Imported Cars Used for Client Reception Be Deducted from Input Tax?
2 Answers
Imported cars used for client reception can be deducted from input tax. Relevant information is as follows: Purchased goods, processing, repair, and replacement services, services, intangible assets, and real estate used for simple tax calculation methods, VAT-exempt projects, collective welfare, or personal consumption. Among them, the fixed assets, intangible assets, and real estate involved refer only to those exclusively used for the above-mentioned projects (excluding other equity intangible assets). The social and entertainment expenses of taxpayers are considered personal consumption. However, when a company purchases a car for client reception, it does not fall under personal consumption, so the input VAT can be deducted.
I run a small business and often need to host high-end clients, so the company imported a luxury car specifically for their transportation. During tax filing, my accountant informed me that the input tax on this car cannot be deducted because client hospitality is considered entertainment consumption, and VAT rules classify it as a personal expense that is non-deductible. The imported car itself incurred high tariffs and VAT at purchase, increasing business costs. Now, we only apply for partial tax deductions when the vehicle is used for business trips and production transportation, opting for alternatives like car rentals for client hospitality, which is more cost-effective. If the vehicle is used for both hospitality and business purposes, strict usage logs must be maintained. It is advisable for small and medium-sized enterprises to plan their vehicle budgets carefully to avoid tax losses and regularly consult with accountants to optimize strategies.
