What is the vehicle tax rate?
2 Answers
Article 4 of the "Vehicle Purchase Tax Law of the People's Republic of China": The vehicle purchase tax rate is 10%. The vehicle purchase tax is calculated based on the ad valorem rate method. The calculation formula is: Tax payable = Taxable price × Tax rate. If a consumer purchases a domestically produced private vehicle, the taxable price is the total payment made to the dealer, including additional fees, but excluding the value-added tax (VAT) (17% rate). Since the purchase price on the special invoice for vehicle sales includes VAT, the 17% VAT must first be deducted when calculating the vehicle purchase tax. That is, the taxable price for vehicle purchase tax = Invoice price ÷ 1.17, and then the 10% tax rate is applied. The vehicle purchase tax is levied as a one-time payment. If a vehicle has already been subject to the vehicle purchase tax, it will not be levied again. The tax payable for vehicle purchase is calculated by multiplying the taxable price of the vehicle by the tax rate. If the taxable price declared by the taxpayer is significantly low without a valid reason, the tax authority will determine the tax payable in accordance with the "Tax Collection and Administration Law of the People's Republic of China." If the payment for the taxable vehicle is settled in foreign currency, it will be converted into RMB based on the central exchange rate of the RMB on the day of tax declaration. The vehicle purchase tax has a time limit. It must be paid within 60 days from the date of the vehicle purchase invoice. Late payments will incur a daily late fee of 0.05% of the tax amount. After the vehicle purchase tax is paid, the tax authority will issue a "Vehicle Purchase Tax Payment Certificate," which the owner must keep safe and does not need to carry in the vehicle. If the certificate is lost, it must be reissued.
When I bought my first car, I knew nothing about taxes. The dealer told me the purchase tax rate was 10%, which is 10% of the invoice price. For example, a 200,000 yuan car would incur a 20,000 yuan tax. This is a national policy used to regulate consumption and the environment, and sometimes there are discounts for small-displacement vehicles. Additionally, there is an annual vehicle and vessel tax based on engine displacement. Here in Beijing, my small car with a 1.5L engine only costs a little over 400 yuan in tax, while a large-displacement SUV might cost thousands. It’s best to check the tax bureau’s website before buying a car to avoid overspending. If it’s a new energy vehicle, it’s currently tax-exempt, saving a significant amount. Tax rates aren’t fixed—for example, they were reduced during the last economic stimulus period—but 10% is generally the standard. I recommend setting aside an extra 10% for taxes when budgeting for a car purchase, so it doesn’t affect your down payment plans.
