Can Large-Displacement Vehicles Be Exempt from Vehicle and Vessel Tax?

[WilliamDella]

Some institutions may evade the vehicle and vessel tax by only purchasing compulsory traffic insurance, but this is essentially tax evasion in principle. Introduction: Vehicle and vessel tax refers to a property tax levied on vehicles and vessels registered with public security, transportation, agriculture, fisheries, military, and other administrative departments within China, calculated based on their type, prescribed tax basis, and annual tax standards. Notes: If the current year's vehicle and vessel tax has already been paid when purchasing compulsory traffic insurance, it does not need to be paid again. However, if the current year's vehicle and vessel tax has not been paid, it must be settled. Insurance companies, as withholding agents, may require the payment of individual income tax, and taxpayers cannot refuse.

[McSara]

I often get asked similar questions by friends. Cars with large engine displacements are generally not exempt from vehicle and vessel tax in China. The tax is levied based on displacement tiers, for example, the tax is lowest for engines below 1.0L, doubles for displacements over 2.0L, and is even heavier for engines above 4.0L. Large-displacement cars consume more fuel and produce more pollution, so the government encourages energy conservation and emission reduction by imposing higher taxes. The only vehicles exempt from this tax are new energy vehicles like pure electric cars, or specific government vehicles. For instance, my neighbor drives a pure electric SUV and pays no tax at all, saving a significant amount. To save money, I recommend choosing a small-displacement car or a second-hand new energy vehicle. Don't just go for the cool factor of a large-displacement car; the additional tax could cost you thousands more per year.

[KevinDella]

As a car owner, I considered taxes when choosing a vehicle. There are no tax exemption policies for large-displacement vehicles regarding the vehicle and vessel tax—the larger the engine, the higher the tax. My advice is to check the tax table carefully. For example, passenger cars under 1.6L may have an annual tax of a few hundred yuan, while those above 3.0L could cost several thousand. The only exemptions are for pure electric vehicles or special military vehicles, but ordinary people driving large-displacement SUVs won’t qualify. To save money, I recommend hybrid vehicles or small-displacement sedans, which offer driving enjoyment while reducing tax burdens. Additionally, maintaining the engine well to save fuel lowers overall costs. Taxes affect monthly fuel and insurance expenses, so it’s essential to calculate the total cost.

[VanFernando]

Many people mistakenly believe that large-displacement luxury cars are tax-exempt, but this is incorrect. The vehicle and vessel tax rules clearly state that higher displacement leads to heavier taxes, with no tax-exempt exceptions. The only exceptions are pure electric vehicles or specific-purpose vehicles. It's advisable to directly check the tax bill or consult the tax authorities to avoid disappointment in trying to save money.