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