China Enacts Tax on Luxury Cars

December 2, 2016 Taxation in China

Tax on luxury cars in ChinaBEIJING – High-price big-engined cars in China will soon face taxes of as much as 50 percent, as the government looks to reduce emissions levels and social inequality.

Earlier this week the government of China announced that it would enact a new tax on the sale of luxury and supercars, in an effort to rein in automotive emissions and control the lavish spending of the country’s elites.

The new tax will be levied at a rate of 10 percent of the purchase price of any vehicle valued at more than CNY 1.3 million (approx. USD 189 thousand).

The tax is targeted at foreign-made imported cars, and, at this stage, does not apply to any models made in China.

Luxury cars in China already face a tax based on their engine size, with large models facing taxes of up to 40 percent.

Several high-end car manufacturers have already come forward to say that they do not expect that the tax will have a significant impact on their sales, as only a small portion of the cars that they sell fall within the scope of the tax.

The tax on luxury cars is not the first tax aimed at curbing excessive spending, as several measures have already been enacted since 2013 to curb consumption of high-end goods such as watches, alcohol and handbags.