How to Calculate Purchase Tax for Used Cars?
2 Answers
When purchasing a used car, if the original owner has already paid the purchase tax, the new owner does not need to pay it again. If the tax has not been paid previously, the new owner needs to make up the purchase tax portion. The calculation method is: taxable price × 10% (5% for passenger vehicles with a displacement of 1.6 liters or below). Below is relevant information about vehicle purchase tax: 1. Overview: Vehicle purchase tax is a tax levied on units and individuals who purchase specified vehicles within the country, evolving from the vehicle purchase surcharge. 2. Taxation details: (1) For vehicles that have already paid the purchase tax, if the vehicle needs to be returned to the manufacturer due to quality issues, a tax refund can be processed with the manufacturer's return certificate; the original tax payment certificate must be surrendered for the refund; failure to surrender the original tax payment certificate will result in no refund. (2) For vehicles that have already paid the purchase tax, if the vehicle needs to be replaced by the manufacturer due to quality issues, the purchase tax change procedure can be processed with the manufacturer's replacement certificate and the new vehicle's invoice, and the original tax payment certificate must be surrendered; failure to surrender the original tax payment certificate will result in no processing of the purchase tax change procedure.
Last time when helping a friend check out a used car, I specifically researched the purchase tax issue. Nowadays, buying a used car generally doesn’t require paying purchase tax, as the first owner already paid it when purchasing the car. However, there are two key points to pay special attention to: first, check the vehicle’s last registration time—if it’s less than two years, you might need to pay a differential tax; second, during the transfer process, you’ll need to pay a vehicle transaction tax, which is calculated as a percentage of the assessed value, and the algorithm varies slightly by region. In our area, it’s calculated at 0.5% based on the higher of the transaction price or the assessed value, and there are payment points right at the entrance of the used car market. In recent years, policies have been relaxed, and many cities have directly waived this tax, so it’s recommended to check with the local DMV directly.
