Can the Input Tax on Purchasing a Car for Personal Use Be Deducted?

[OReid]

For general taxpayers purchasing cars for personal use, as long as the cars are not used for non-deductible purposes, the input tax is deductible. Relevant policies: Original VAT taxpayers (referring to taxpayers who pay VAT according to the "Provisional Regulations of the People's Republic of China on Value-Added Tax" (hereinafter referred to as the "VAT Provisional Regulations")) have the following policies regarding input tax: Input tax: The input tax on motorcycles, cars, and yachts subject to consumption tax for personal use by original general VAT taxpayers is allowed to be deducted from the output tax. Original general VAT taxpayers receiving taxable services from pilot taxpayers cannot deduct the input tax from the output tax for the following items: items calculated using the simplified tax calculation method, non-VAT taxable items, VAT-exempt items, collective welfare, or personal consumption, including patent technology, non-patent technology, goodwill, trademarks, copyrights, and tangible movable property leasing, but only if these are exclusively used for the above items. The above-mentioned non-VAT taxable items refer to the non-VAT taxable items mentioned in Article 10 of the "VAT Provisional Regulations," but do not include the items listed in the "Commentary on the Scope of Taxable Services." If a company purchases a new car in its name and the company is a general taxpayer, it can request the deduction copy of the unified motor vehicle sales invoice from the dealer and deduct the input tax based on the VAT amount indicated on the deduction copy. The vehicle purchase tax paid should be included in the cost of the car and recorded as fixed assets. After the company records the purchased vehicle as fixed assets, it should calculate depreciation using the straight-line method, and the depreciation expense should be included in the relevant costs and expenses, which are deductible before income tax, effectively offsetting the income tax expense.