Do domestically produced cars need to pay purchase tax?
2 Answers
Domestically produced cars do need to pay purchase tax, they are just exempt from import tariffs. The vehicle purchase tax is a type of tax levied on purchasers of specified vehicles within China at a specific stage, with the nature of a direct tax. This tax has specific purposes, as it is centrally allocated by the central government according to national transportation construction investment plans. As a purpose-specific tax, the vehicle purchase tax can ensure the needs of national fiscal expenditure, facilitating both rational fund allocation and guaranteeing expenditures for specific projects and construction needs.
I just bought a domestic SUV last month. When purchasing the car, the 4S store salesperson reminded me that I must pay the purchase tax, which accounts for about 10% of the car price, just like imported cars, and it's unavoidable. I asked why this fee is still charged, and they explained that it's a unified national tax policy used to support road construction and traffic safety subsidies, among other things. After paying, it indeed took a significant chunk of my budget, increasing the total cost considerably, but considering the safety on the road, it's worth it. Nowadays, the quality of domestic cars has improved greatly, with brands like Hongqi and Changan optimizing their designs, making them very stable to drive. It's best to calculate the tax in advance when buying a car and go through the formal channels for the procedures. Additionally, new energy models sometimes qualify for partial tax reductions, but ordinary fuel vehicles can't avoid it. Learning more about the official policies can help avoid being misled.
