Is it mandatory to pay purchase tax when buying a car?
2 Answers
Purchasing a car requires payment of vehicle purchase tax, which is a tax levied on entities and individuals who purchase specified vehicles within the country. It evolved from the vehicle purchase surcharge. The current basic regulations of the vehicle purchase tax law are implemented from January 1, 2001, under the "Interim Regulations of the People's Republic of China on Vehicle Purchase Tax." The taxpayers of vehicle purchase tax are entities and individuals who purchase (including buying, importing, self-producing, receiving as gifts, winning as prizes, or obtaining through other means and using personally) taxable vehicles. The scope of taxation includes cars, motorcycles, electric vehicles, trailers, and agricultural transport vehicles. The vehicle purchase tax is calculated using an ad valorem rate method. The calculation formula is: tax payable = taxable price × tax rate. If you buy a domestically produced private car, the taxable price is the total payment to the dealer plus additional fees, excluding the value-added tax (VAT rate of 17%). For example, when buying a domestically produced car priced at 100,000 yuan, after deducting the VAT portion, a 10% tax is applied. If you buy an imported private car, the calculation formula for the taxable price is: taxable price = customs duty-paid price + customs duty + consumption tax.
To be honest, I was also concerned about this issue before buying a car. The purchase tax is indeed mandatory in most cases—it's a tax calculated based on the new car's price and is basically unavoidable in China's new car sales; otherwise, it will affect license plate registration and insurance. I remember when I changed my car last year, for a 100,000-yuan car, I had to pay an additional 8% or so in taxes, which significantly increased the total cost. However, some models are tax-exempt, such as pure electric vehicles or plug-in hybrids, as the government waives this part to encourage environmental protection. Also, if you're buying a used car or an imported car, the tax rate might differ, but for new cars, it's generally unavoidable. It's best to consult the sales advisor or check the official website before purchasing to confirm the tax exemption details and rules. Don't count on evading taxes—the tax authorities are very strict, and penalties can be costly. In short, I recommend including this cost in your budget, treating it as part of the car's price when planning, so you won't be caught off guard.
