What Taxes Are Required When Purchasing a Car?

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A car is a significant purchase, and buying one involves several taxes, including consumption tax, value-added tax (VAT), purchase tax, vehicle and vessel tax, and import tax. Here's a more detailed introduction: 1. Consumption Tax: In fact, most consumer goods in daily life are subject to consumption tax, but many people are unaware that this is an included tax, embedded in the price. The same applies to cars. Before a car even leaves the factory, the manufacturer must pay the consumption tax, which is ultimately passed on to the consumer. 2. Value-Added Tax (VAT): This cost is already included in the car's price in advance. VAT is levied on the added value of goods during the circulation process. The VAT for motor vehicles = total car price ÷ 1.17 (tax basis) × 17%. VAT is a tax imposed on car dealers after they sell a car and is targeted at the dealers. 3. Purchase Tax: This is a tax paid by the car owner after acquiring the vehicle. Whether through purchase, winning a prize, or any other means, as long as ownership is obtained, this tax must be paid. Vehicle purchase tax = tax basis × 10%. For vehicles with an engine displacement below 1.6 liters, the rate was previously 5%. 4. Vehicle and Vessel Tax The vehicle and vessel tax varies by province, and the annual amount depends on the car's engine displacement. This tax applies only to vehicles and vessels and is a mandatory fee when purchasing insurance for a new car. It must be paid annually and is a form of property tax. The rates were adjusted in 2017, making them lower than before. 5. Import Tax: Buying an imported car also requires paying an import tax, which was previously 25% but is said to be reduced to 15% in the future.