What Taxes Need to Be Paid When Buying a Car?
2 Answers
Taxes to be paid when buying a car: consumption tax, value-added tax, purchase tax, and vehicle and vessel tax. The following is a partial introduction to the taxes required for car purchases: 1. Consumption Tax: The purchase tax often mentioned when buying a car is actually an excise tax, while in reality, car manufacturers also pay taxes when producing vehicles, including the consumption tax, which is an indirect tax. 2. Value-Added Tax: The current value-added tax system is based on the "Provisional Regulations of the People's Republic of China on Value-Added Tax" (State Council Order No. 134) promulgated by the State Council on December 13, 1993. Value-added tax refers to a turnover tax levied based on the added value generated during the circulation of goods (including taxable services). 3. Purchase Tax: The Ministry of Finance issued a document on September 22, 2016: from January 1, 2017, to December 31, 2017, a 7.5% vehicle purchase tax rate was applied to passenger vehicles with a displacement of 1.6 liters or less. 4. Vehicle and Vessel Tax: The vehicle and vessel tax, also known as the vehicle and vessel usage tax, is a usage behavior tax levied on vehicles traveling on public roads and vessels navigating domestic rivers, lakes, or ports, calculated based on their type (such as motor vehicles, non-motor vehicles, passenger cars, cargo trucks, etc.), tonnage, and specified tax rates.
I have gone through multiple car purchasing processes, and there are several main taxes involved when buying a car. One is the vehicle purchase tax, which is approximately 10% of the new car's price and is paid in a lump sum at the time of purchase. The calculation is straightforward—for example, a car priced at 150,000 yuan would incur a tax of 15,000 yuan. Another is the vehicle and vessel usage tax, which is paid annually and is determined based on the vehicle's engine displacement. Higher displacement means higher tax, typically ranging from a few hundred to several thousand yuan. For instance, a 1.5L displacement car would have an annual tax of around 700 yuan. These taxes are mandatory and should be included in the total budget before purchasing a car. Don't just focus on the car price and overlook the tax burden, or you might end up with a headache from overspending. Personally, I also remind everyone that the new car price may include value-added tax (VAT), which is not an additional tax but affects the actual expenditure. Opting for low-displacement models can save on taxes, especially since electric vehicles currently enjoy purchase tax incentives. However, policies change quickly, so it's best to check in advance to avoid pitfalls.
