What is the purchase tax for a new car?
2 Answers
For passenger vehicles with an engine displacement of 1.6 liters or below, the purchase tax is levied at a reduced rate of 7.5%. More information about the purchase tax is as follows: 1. The basic regulations of the current vehicle purchase tax law are implemented from January 1, 2001, under the "Provisional Regulations of the People's Republic of China on Vehicle Purchase Tax." The taxpayers of the vehicle purchase tax are units and individuals who purchase (including buying, importing, self-producing, receiving as gifts, winning as prizes, or obtaining through other means for personal use) taxable vehicles. The tax scope includes cars, motorcycles, electric vehicles, trailers, and agricultural transport vehicles, with a tax rate of 10%. The calculation formula for the tax payable is: Tax Payable = Taxable Price × Tax Rate. 2. Calculation for domestic vehicles: Taxable Price = (Total Payment to the Seller + Additional Fees) × 10%, where the taxable price does not include VAT. Calculation for imported vehicles: Taxable Price = (Customs Duty-paid Price + Customs Duty + Consumption Tax) × 10%.
Last time I bought a new car, the purchase tax was 10% of the vehicle price. My car's invoice price was 180,000 RMB, so the tax came to just over 18,000 RMB. But it's important to note that the vehicle price includes VAT, so the tax base should be calculated based on the pre-tax price to avoid exceeding your budget. I also researched policies and found that new energy vehicles like electric cars are currently tax-exempt, which can save a lot of money. Don't forget to factor in insurance and registration fees, which can add thousands to the total cost. I recommend consulting your local vehicle management office in advance, as policies may be adjusted slightly each year. Don't make the same mistake I did by rushing into a purchase and regretting not asking enough questions. If you opt for a higher trim with a more expensive price tag, the tax will increase accordingly, so make sure to leave enough room in your budget and don't just focus on monthly payments.
