Value-added tax (VAT) is a turnover tax based on the value added during the circulation of goods (including taxable services). From the perspective of taxation principles, VAT is a turnover tax levied on the value-added or additional value of goods in many links such as commodity production, circulation, and labor services. The VAT on motor vehicle sales = total car purchase price ÷ 1.17 × 17%. The "Interim Regulations on Vehicle Purchase Tax of the People's Republic of China" stipulates in Article 4: The amount of vehicle purchase tax payable is calculated on an ad valorem basis. The formula for the tax payable is: Tax payable = Taxable amount × Tax rate. The vehicle purchase tax rate is 10%, and any adjustments to the vehicle purchase tax rate are decided and announced by the State Council. The taxable value of the vehicle purchase tax is determined according to the following provisions under different circumstances: For self-use taxable vehicles purchased by taxpayers, the taxable value is the total amount paid by the taxpayer to the seller for the purchase of the taxable vehicle, excluding VAT. The formula for calculating the taxable value of self-use imported taxable vehicles by taxpayers is: Taxable value = Customs dutiable value + Consumption tax. For self-use taxable vehicles obtained by taxpayers through production, donation, reward, or other means, the taxable value is determined by the competent tax authority with reference to the minimum taxable value stipulated in Article 7 of these Regulations. Starting from May 1, 2018, the VAT rate for manufacturing, automobiles, and other industries was reduced from 17% to 16%, and the VAT rates for transportation, construction, basic telecommunications services, and agricultural products were reduced from 11% to 10%. The following is an introduction to the relevant regulations: Calculation basis: The general vehicle purchase tax is based on the purchase price shown in valid documents such as the "Unified Invoice for Motor Vehicle Sales" or the "Special Customs Duty Payment Certificate" and should be calculated using the taxable value of the vehicle purchase tax after deducting VAT. Automobiles only need to pay the purchase tax once, usually when purchasing a new car. In other words, used cars do not need to pay the purchase tax. However, if the purchase tax was not paid when the new car was purchased, the new owner must pay the purchase tax after the used car transaction. If the vehicle purchase tax payment certificate is lost, the taxpayer must hold the "Motor Vehicle Driving License" and apply to the original issuing tax authority for a replacement, filling out the "Application Form for Replacement (Reissue) of Vehicle Purchase Tax Payment Certificate". For individuals, the replacement must be handled in person and cannot be delegated; for units, the application form must be stamped, and the handling person must provide their ID card and a copy, signing the application form. Replacement of the purchase tax certificate: Submit the original and a copy of the driving license of the vehicle requiring replacement or the original and a copy of the motor vehicle registration certificate, the original and a copy of the owner's ID card, and obtain the "Application Form for Replacement (Reissue) of Vehicle Purchase Tax Payment Certificate". Publish a loss statement in the "China Taxation News" or other publicly circulated newspapers designated by the State Administration of Taxation of the province, autonomous region, or municipality directly under the central government, and fill out the "Application Form for Replacement (Reissue) of Vehicle Purchase Tax Payment Certificate". After the publication, bring the "Replacement Application Form", the original and a copy of the vehicle driving license or the original and a copy of the motor vehicle registration certificate, the original and a copy of the owner's ID card, and the newspaper with the loss statement to the vehicle purchase tax transfer and replacement window to complete the replacement procedure. Purchase tax. Generally, automobiles need to pay a vehicle purchase tax of 10% of the transaction price. Vehicle purchase tax = Non-tax sales amount × Tax rate. Consumption tax. Consumption tax is an internal tax included in the car sales price. The consumption tax rate for passenger vehicles is determined based on the engine displacement. The larger the displacement, the higher the tax rate. Customs duty. Imported cars are subject to a 25% customs duty based on the CIF price when they arrive in the country. Vehicle and vessel tax. The vehicle and vessel tax is now included in vehicle insurance. The insurance premium for new cars consists of compulsory insurance, commercial insurance, and the vehicle and vessel tax. The vehicle and vessel tax is also determined based on the engine displacement, with slight variations in standards across different provinces.
