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Japan To Restructure, Cut Tax On Vehicles

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

10 December 2015


The Japanese Government is planning to set out a new simplified car tax framework based on fuel efficiency, to replace the country's vehicle acquisition tax.

The new tax would be introduced at the same time as the next two percent hike in the consumption tax rate to 10 percent from April 2017 and would be announced in the 2016 Budget. It would be payable on a vehicle's purchase price, but vehicles achieving a fuel efficiency of 10 percent more than 2020 fuel economy standards would be exempt.

Compared with the vehicle acquisition tax, the new system would simpler, reducing the number of different rates from five to three. The lowest rate, of one percent, would be imposed on vehicles meeting 2020 fuel economy standards, and the highest rate, of three percent (as is presently the case), would be charged on those cars with the worst fuel efficiency.

In addition to the new tax, vehicles would still be subject to the annual local automobile tax and the national vehicle tonnage tax paid by vehicle owners when their vehicles undergo mandatory inspections.

More cars are expected to be taxed at lower rates under the new scheme, and the Government anticipates that the tax will net JPY20bn less revenue than the JPY110bn it received through the vehicle acquisition tax last year.

TAGS: environment | tonnage tax | tax | sales tax | vehicle tax | budget | tax rates | tax breaks | Japan

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