What taxes are required when buying a car?
1 Answers
Taxes required when buying a car include consumption tax, value-added tax (VAT), purchase tax, and vehicle and vessel tax. Below is a detailed introduction to these taxes: 1. Consumption Tax: The automobile consumption tax is a new tax category introduced during China's tax reform in 1994 and was included in the "Provisional Regulations of the People's Republic of China on Consumption Tax" effective from January 1, 1994. For passenger cars, it imposes three-tiered tax rates based on different engine displacements, targeting manufacturers. 2. Value-Added Tax (VAT): VAT is a turnover tax levied on the incremental value generated during the circulation of goods (including taxable services). It applies to the sale of goods, provision of processing, repair, and replacement services, import of goods, and tangible movable property leasing services, among others, at a rate of 17%. Automobile sales fall under this category. 3. Purchase Tax: A 10% vehicle purchase tax is levied on passenger cars with an engine displacement of 1.6 liters or below. The formula for calculating the new car purchase tax is: New car price (including tax) ÷ 1.17 (VAT rate of 17%) × purchase tax rate. 4. Vehicle and Vessel Tax: Vehicle and vessel usage tax is a behavioral usage tax calculated and levied based on the type (e.g., motor vehicles, non-motor vehicles, passenger cars, cargo trucks, etc.), tonnage, and specified tax amounts for vehicles traveling on public roads and vessels navigating domestic rivers, lakes, or territorial ports.
