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China Changes Vehicle Taxes From January 1

by Mary Swire, Tax-News.com, Hong Kong

23 December 2011


China’s State Administration of Taxation (SAT) has disclosed that a new tax, the Vehicle and Vessel Tax, will introduce changes to the automotive sector by encouraging energy conservation and environmental protection through the increased use of vehicles with low emissions or those utilising green energy resources.

With effect from January 1, 2012, vehicles required to pay the tax will include passenger cars with up to nine seats, commercial vehicles and motorcycles; but electric and hybrid vehicles will be tax-exempt. Tax rates, based on a vehicle’s engine size, will start at RMB300 (USD47.25) per year, but reach RMB5,400 for cars with engines above 4,000cc.

Under the new tax system, which is currently based on a vehicle’s seating capacity, cars with engine capacities of less than 2,000cc will find their tax rates slightly reduced or, at most, unchanged, while those with engines between 2,000cc and 2,500cc will see a moderate increase and those with engines above 2,500cc will experience a substantial tax rise.

According to the SAT, it is expected that only the 13% of vehicles with engines of 2,000cc or more will be affected by the new taxes, with the 3% with engines above 2,500cc being affected the most. It is hoped that, together with the exemption for ‘green’ vehicles, this will provide some boost to emissions-reduction and more fuel-efficient technology in the sector.

TAGS: environment | tax | business | energy | vehicle tax | China | tax rates

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