What Are the Impacts of Underreporting on Car Purchase Invoices?
2 Answers
The impacts of underreporting on car purchase invoices should be considered from the following two aspects: 1. Advantages: Underreporting does have some benefits, such as using the actual invoiced amount as the tax standard, which can reasonably avoid part of the purchase tax. When buying insurance, due to the reduced car price, the cost of car loss will also be lower, but the impact is not significant. 2. Disadvantages: (1) When purchasing car loss insurance, the overall coverage amount will also decrease. In the event of a major accident resulting in a total loss, the insurance company will use the invoice amount as the compensation standard; (2) In case of theft, if the owner has purchased theft insurance, the invoice amount will also be used as the calculation standard; (3) The most significant impact is on the three guarantees. In the event of a car return or exchange, the invoice amount will be used as the standard.
As a first-time car buyer, I thought underreporting the purchase invoice could save on purchase tax since it's calculated based on the invoice amount. A lower invoice means less tax, which seems like a quick way to keep more money in my pocket. But this approach has serious downsides. When filing an insurance claim, insurers only consider the invoice price. If you underreport significantly—say, a ¥200,000 car listed as ¥150,000—and the car is severely damaged in an accident, the insurer will only cover ¥150,000, leaving you to pay the remaining repair costs out of pocket, which could be substantial. When selling the car later, buyers will check the original invoice and aggressively negotiate down the price—a car that could sell for ¥100,000 might only fetch ¥80,000. Long-term risks include tax audits, back taxes, fines, and damage to your credit record. Trying to save a little upfront isn’t worth the trouble. My advice: always report the actual purchase price to avoid endless headaches.
