China Cuts Taxes for Small Cars

September 30, 2015 Taxation in China

BEIJING – China is looking to improve the environment while boosting sales new automobiles by introducing a temporary tax breaks on small-capacity vehicles.

On September 29th the State Council of China announced that the 10 percent tax on the purchase of new vehicles will be halved on the purchase of cars with engine capacities lower than 1.6 litres.

The tax break, which is set to take effect on September 30th and last until the end of next year, is intended to reduce the consumption of energy and fuels in China, while at the same time boosting sales of automobiles.

The market for the purchase of new automobiles in China has seen a slowdown, in line with a general decrease in economic activity in the country, and also in line with the government’s crackdown on corruption.

Alongside the tax cut, the government has also forbidden local government from enacting any restrictions on the number of vehicles which a consumer may purchase.

Further, in addition to promoting the purchase of cars with small engine capacities, the government warned local governments that they may face a cut in subsidies if they lag behind in the implementation of environmentally friendly technology for public transport.

Photo By: poeloq