How to Calculate Purchase Tax Based on the Ex-factory Price of a Car?
3 Answers
Vehicle purchase tax payable = taxable price * 10% (7.5% for passenger vehicles with an engine displacement of 1.6 liters or below). More details about the purchase tax are as follows: 1. Introduction: Vehicle Purchase Tax is a tax levied on entities and individuals who purchase specified vehicles within China. It evolved from the vehicle purchase surcharge and was implemented on January 1, 2001, in accordance with the "People's Republic of China Vehicle Purchase Tax Law." 2. Purpose: The Vehicle Purchase Tax is imposed on users of taxable vehicles at the consumption stage, better reflecting the principle of fairness. The principle of fairness aims to protect legal income, ban illegal income, rectify unreasonable income, and regulate excessively high income. Therefore, the imposition of the Vehicle Purchase Tax can regulate excessively high consumption expenditures. It embodies the principle of taxpaying ability, meaning that higher-income individuals bear more tax, while lower-income individuals bear less tax. Those with higher consumption capacity bear more tax than those with average consumption capacity.
As someone who frequently helps friends calculate car expenses, I always start with the ex-factory price when calculating purchase tax. Simply put, the purchase tax isn't a straight 10% multiplication—it's based on the taxable price. Typically, you divide the ex-factory price by 1.13 and then multiply by 10%, or more conveniently, divide the ex-factory price by 11.3. For example, if you buy a car with an ex-factory price of 100,000 yuan, the tax would be approximately 8,849 yuan. Many people make the mistake of directly multiplying 100,000 by 10%, resulting in 10,000 yuan, which means overspending. The key is to confirm whether the invoice price includes VAT—the ex-factory price usually does. I recommend using a mobile app or online calculator to double-check, or simply ask the salesperson for help, as minor tax rate changes—like exemptions for new energy vehicles or engine displacement discounts—can affect the final amount. In short, clarify these details before spending your money to save both cash and hassle.
When I first bought my new car, my budget was tight, and calculating the purchase tax became a top priority. If the ex-factory price was 100,000 yuan, I would quickly grab a calculator and divide it by 11.3, resulting in a tax of about 8,849 yuan. This amount had to be included in the total cost, or else overspending could be troublesome. Experience taught me not to just focus on saving a bit on the ex-factory price—once taxes were added, it could easily reach nearly 10,000 yuan, affecting the monthly payment plan. I also made it a habit to compare policies for different models, like potential tax reductions for small cars under 1.6 liters—choosing the right one could save thousands. Of course, the new car invoice must be checked carefully to avoid intermediaries overcharging. To save money, I always calculated it myself or referred to the official website guide. I often reminded beginners to plan this expense in advance.
