Vehicle purchase tax
Pursuant to relevant policies, entities and individuals purchasing vehicles within China must pay a vehicle purchase tax, which is a one-time levy. Individuals purchasing new cars must pay the vehicle purchase tax, but are free from it when buying second-hand cars. The 10 percent tax is collected by the State Administration of Taxation, and applies to automobiles, motorcycles, trolleys, trailers, and agriculture vehicles. Tax payable = tax base × tax rate.
Tax base: when a tax payer buys a taxable vehicle for self-use, the taxable value is the full price and other charges the customer pays the seller, excluding value-added tax. Other charges include the fund contribution, fund-raising fees, penalty (interest on deferred payment) and commission, package costs, storage costs, tips, shipping and delivery fees, custody fees, and other fees and costs collected from the buyer, excluding insurance premium by the seller as an insurance agent, or the vehicle purchase tax and the vehicle license fees collected on behalf of the buyer.
Time of tax declaration and payment: a taxpayer buying a taxable vehicle for self-use should pay the vehicle purchase tax before registration with the public security bureau and other vehicle management units within 60 days from the date of purchase (as indicated on the vehicle purchase invoice).
Venue of tax declaration and payment: a taxpayer buying a taxable vehicle and needing to register in the local vehicle management unit needs to declare tax with the local tax authority at the place of vehicle registration (the original place of the car license). Those purchasing a taxable vehicle without need of vehicle registration should declare the vehicle purchase tax and paid it to the applicable tax collection authority at the place of residence of the tax payer.
In line with the Notice on Exempting Vehicle Purchase Tax for New Energy Vehicles issued by the Ministry of Finance, State Administration of Taxation, Ministry of Industry and Information Technology, and Ministry of Science and Technology (Notice No 172 of 2017 of the Ministry of Finance), from January 1, 2018 to December 31, 2020, new energy vehicle purchases are exempted from collection of vehicle purchase tax. The details are included in the notice.
Vehicle and vessel tax
Vehicle and vessel tax is a property tax collected on vehicles and vessels within China calculated in line with collectable items, tax units, and annual amount of payable tax.
Owners or managers of vehicles and vessels bear a tax-paying obligation. For household vehicles, the owner registered on the driver’s license is the taxpayer.
In line with the Measures of Implementing Vehicle and Vessel Tax Law of the People's Republic of China in Beijing, Beijing collects a one-time tax on vehicles and vessels following an approach of annual declaration and calculation by month. The declaration period is from January 1 to December 31. For newly purchased vehicles and vessels, the tax payable in the year of purchase should be calculated by month, from the month when the tax obligation arises. It should be the annual payable amount divided by 12 and multiplied by the number of months for which the tax is payable. In other words, the tax is payable from the month of purchase.
Pursuant to the Notice on Exempting New Energy Vehicle and Vessel Tax by the Ministry of Finance, State Administration of Taxation, and Ministry of Industry and Information Technology (Notice No 51 of 2015 of the Ministry of Finance), energy-saving vehicles and vessels are subject to reduction or exemption of tax. The details are included in the notice.
Vehicle purchase tax refund: if a taxpayer identifies quality issues with the vehicle purchased and applies for a tax refund, the tax authority shall refund the tax paid in full if it is less than one year from the date of tax declaration. After a year, the refund shall be calculated on the basis of a 10 percent deduction for each full year since tax payment.
Vehicle and vessel tax refund: a taxpayer can request a refund of vehicle and vessel tax for the period from the month of car return till the end of the tax year. The month of car return shall be the month recorded on the return ticket.