What is the reduction policy for the purchase tax on small-displacement vehicles in 2021?

2 Answers
Mercedes
07/28/25 11:53pm
2021 vehicle purchase tax rate is 10%. The vehicle purchase tax is a tax levied on entities and individuals who purchase specified vehicles within China. All purchases, including buying, importing, self-producing, receiving as gifts, winning as prizes, or obtaining through other means for self-use of taxable vehicles, are subject to the vehicle purchase tax. However, the state makes minor adjustments to the preferential policies for the purchase tax every year. The calculation formula for the taxable amount is as follows: 1. Calculation for self-use vehicles: out-of-pocket expenses × 10%, where out-of-pocket expenses do not include VAT; 2. Calculation for imported vehicles: taxable price = customs duty-paid price + customs duty + consumption tax taxable price × 10%; 3. Purchase tax amount: The purchase tax amount is 10% of the vehicle's selling price (excluding tax), and the formula is: new vehicle purchase tax amount = vehicle purchase price (including tax) / 1.17 * 10%.
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CaydenRose
08/12/25 4:12am
In 2021, I bought a small-displacement car with an engine capacity below 1.6 liters. The dealer told me there was no purchase tax reduction that year, and the full 10% of the original price was charged. In 2020, there was a 50% discount, but it expired and wasn't renewed, which was quite a pity. At that time, I paid nearly ten thousand in taxes, which made me a bit hesitant, but the small-displacement car is very fuel-efficient for daily driving, saving a lot on gas money, and maintenance is much cheaper than for larger cars. I think the government might be promoting electric vehicles by offering purchase tax exemptions for EVs, making brands like BYD quite cost-effective. Small-displacement cars are agile in the city, easy to park, and meet the China VI emission standards, which is better for the environment, so buying one isn't a bad deal. If I were to buy another car, I would consider overall savings, such as hybrid models which also have lower taxes.
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