How is the Luxury Car Consumption Tax Calculated?
2 Answers
For ultra-luxury passenger vehicles, in addition to the current consumption tax rate applied during the production phase, an additional consumption tax of 10% is levied at the retail stage. The calculation formula is: Total vehicle purchase cost (including VAT amount) ÷ 1.17 × tax rate (10%) = Luxury car consumption tax payable. This applies to mid-to-high-end passenger vehicles and medium-light commercial passenger vehicles, specifically the ultra-luxury car subcategory within these vehicle classifications.
I've purchased several luxury cars, so I'm well-versed in how the luxury car consumption tax is calculated. In China, there's an additional 10% consumption tax levied on cars with a selling price exceeding 1.5 million yuan. For example, if you buy a BMW priced at 1.6 million yuan, the 100,000 yuan exceeding the threshold is taxed at 10%, resulting in a tax payment of 10,000 yuan. This tax is implemented to control luxury consumption and guide policy, and it's typically directly displayed on the car purchase invoice—not a single cent can be spared when paying. Many people ask if there's a way to save money. From my experience, choosing dealership promotions when buying a car can help, as they may reduce some fees. Alternatively, second-hand luxury cars usually have the tax already paid, making them a more cost-effective option. In short, when budgeting for a luxury car, you must set aside funds for this tax to avoid blowing your budget at the last minute. Remember, the tax threshold may be adjusted, but as of 2023, it still starts at 1.5 million yuan.
