New Car Taxes in China

December 20, 2011 Taxation in China

Car tax in ChinaBEIJING – Taxes on owners of motor vehicles are being changed in China, with new rates aimed at encouraging taxpayers to choose greener and more fuel efficient vehicles.

On December 19th the State Administration of Taxation of China revealed the Vehicle and Vessel Tax Law, stating that from January 1st 2012 new taxes will be instated on all vehicles in the country.

The new tax will be levied on passenger vehicles with engine sizes above 1L and with seating capacities of less than nine passengers. The tax rate begins at RMB 300 per year for the smallest cars, and will reach up to RMB 5 400 for cars with engine capacities above 4L. The tax rates have been balanced to encourage drivers to use cars with engines below 2L in size. Electric passenger vehicles and cars utilizing efficient hybrid technologies will not be subject to any ownership tax.

Commercial busses will be taxed a maximum of RMB 1 440 per year. Trucks and other heavy duty commercial vehicles will be levied at up to RMB 120 per ton of curb weight. Any trailers attached to the truck will be charged at a rate equal to half of the truck’s tax rate per ton.
Motorcycles and other small two wheeled vehicles will see a maximum tax rate of RMB 180.

Currently, vehicle taxes in China are calculated on the seating capacity. According to the State Administration of Taxation, nearly 87 percent of all passenger vehicles will not face a higher tax obligation under the new tax regulation. Owners of approximately 28 percent of all trucks and motorcycles would also not see higher tax liabilities.

The State Administration of Taxation claims that the new measures will encourage taxpayers to use more efficient technologies, and aid the push towards low emissions vehicles.

Photo by Eternal Vagabond