What taxes are required for a car?
3 Answers
Automobiles are subject to two main taxes: vehicle purchase tax and vehicle and vessel usage tax. Below are the specific details: Vehicle Purchase Tax paid when purchasing a car: The vehicle purchase tax is calculated based on an ad valorem rate. The calculation formula is: Tax Payable = Taxable Price × Tax Rate. Small-displacement vehicles (below 1.6L) enjoy a 50% reduction in purchase tax, while large-displacement vehicles (above 1.8L) receive no discounts. Vehicle and Vessel Usage Tax paid annually during vehicle usage: Passenger vehicles with engine displacements less than or equal to 1 liter are taxed according to the micro-passenger vehicle tax rate. The engine displacement is determined based on the figure stated in the relevant document.
I was shocked by all the taxes when I first bought a car, the most obvious being the vehicle purchase tax, which is paid in a lump sum when picking up the car, usually about 10% of the car's price. For example, if I buy a sedan for 150,000 yuan, the tax would cost 15,000 yuan. Don’t underestimate the value-added tax, as it’s already included in the purchase price. There’s also a registration tax when registering the vehicle, which can be a few hundred in small cities and possibly over a thousand in big cities. These taxes add up to a significant extra cost beyond the car’s price, so I advise new buyers to budget for this in advance. Additionally, insurance often includes the vehicle and vessel tax, but that’s an annual fee. Remember, taxes aren’t just part of the purchase cost but also affect ongoing maintenance expenses, so plan ahead. From experience, taxes don’t vary much between brands, but new energy vehicles might have some discounts or exemptions.
Having driven for many years, I understand that annual taxes like the vehicle and vessel tax are fixed expenses, calculated based on engine displacement. My small-displacement car costs about 300 to 500 yuan per year. In big cities, it's settled during the annual vehicle inspection, saving trips to multiple places. Although one-time taxes like the purchase tax at the time of buying a car are in the past, daily fuel taxes also indirectly affect costs—over 30% of fuel prices are taxes. I believe car maintenance costs, including taxes, shouldn't be overlooked, especially since late payment of the vehicle and vessel tax can incur fines. Overall, the tax burden isn't heavy, but it's a recurring expense every year. I suggest fellow drivers set up a dedicated account to save for this expense to avoid hassle. Though taxes can be annoying, they are a source of funding for road maintenance and public services.
