Does Under-invoicing Affect the Car?
1 Answers
Under-invoicing affects the car, including impacts on the vehicle's second-hand resale value, lower second-hand valuation, insurance claims based on the invoice amount, potential reductions in repair and claim amounts, refund or compensation based on the invoice amount, and tax-related issues. The specific explanations are as follows: Insurance companies determine claims or compensation standards based on the invoice amount. When an event requiring a claim occurs, under-invoicing will affect the claim amount. Aside from insurance claims, regular repairs or other related claims will also reference the invoice amount. If the vehicle experiences quality issues during use and meets the three-guarantee compensation standards, requiring refunds, replacements, or compensation, the compensation amount will be entirely based on the invoice amount. The government sets a minimum selling price standard for each car model. If the price falls below the minimum without a reasonable justification, it constitutes tax evasion, which is illegal. Once verified, according to the "Provisions on the Standards for Prosecution of Economic Crime Cases" by the Supreme People's Procuratorate and the Ministry of Public Security, the tax evader may face fines ranging from 50% to five times the underpaid tax amount. Under-invoicing reduces the vehicle's residual value. During normal use, a car's value depreciates, especially when sold as a second-hand vehicle after several years. The depreciation can be significant. The calculation of a car's depreciation also references its new car transaction price. If the car was under-invoiced when new, the impact on its residual value can be substantial.
