What is the Vehicle Purchase Tax?
1 Answers
"The vehicle purchase tax rate for gasoline and diesel vehicles is 10%. According to the "Vehicle Purchase Tax Law of China" (hereinafter referred to as the "Purchase Tax Law") announced on July 1, 2019, it can be understood that the vehicle purchase tax rate is 10%. Before January 1, 2018, the purchase tax for private vehicles experienced a period of reduction. However, starting from January 1, 2018, the purchase tax for passenger vehicles with an engine displacement of 1.6 liters or below was restored to 10%. Therefore, the preferential policy for gasoline and diesel vehicle purchase tax is no longer applicable in 2022. The purchase tax is only 10% of the vehicle's pre-tax price. Car owners often confuse the vehicle purchase tax with the value-added tax (VAT). In fact, these two taxes are different. The earliest VAT rate for vehicles in China was 17%, which was later reduced to 16%, and now it has been further reduced to 13%. When calculating the vehicle purchase tax, the vehicle's price does not include the VAT. Calculation method for purchase tax: From the above, it can be seen that the current vehicle purchase tax in China is 10% of the vehicle's market price (excluding VAT), while the VAT rate is 13%. Therefore, according to the "Purchase Tax Law", the calculation method for vehicle purchase tax in 2022 is: Taxable amount of vehicle purchase tax = Taxable vehicle's purchase price x Tax rate."
