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China issues detail policies regarding Vehicle Purchase Tax Law

To implement earnestly Vehicle Purchase Tax Law of the PRC, China’s Ministry of Finance and State Taxation Administration jointly issued on May 24 the Announcement on Detailed Policies Concerning Vehicle Purchase Tax, which shall come into effect on July 1, 2019.

The announcement clearly states that such urban railway transportation vehicles as subway and light rail, special-purpose vehicles like loader, land leveler, excavator, earthmover, as well as other types including crane, forklift and electric motorcycle are not in the range of taxable vehicle types.

In accordance with the announcement, the full price actually paid by the taxpayer (who purchase a taxable vehicle for its own use) to the seller, shall be based on the price indicated on the relevant document at the time of acquiring the taxable vehicle, excluding the value-added tax (VAT). Besides, “importing a taxable vehicle for one’s own use” means the act in which a taxpayer directly imports taxable vehicles for its own use from overseas markets or entrusts agents with the business (imported vehicles bought from domestic market are not included).

In addition, the taxable price of a taxable vehicle manufactured by a taxpayer itself for its own use shall be determined according to the sales price of similar taxable vehicles manufactured by the taxpayer, excluding VAT.

The Vehicle Purchase Tax Law of the PRC was adopted at the 7th Session of the Standing Committee of the Thirteenth National People's Congress on December 29, and was set to come into force on July 1, 2019. 

The Law stipulates that any entity or individual that acquires an automobile, a tramcar, a trailer, or a motorcycle with a gas replacement of over 150 milliliters (namely, the “taxable vehicles” mentioned above) in the territory of the PRC shall be the taxpayer of the vehicle acquisition tax, and pay the vehicle acquisition tax in accordance with the provisions of this Law. The rate of the vehicle purchase tax shall be 10%.