While new cars are generally subject to a 10% sales tax, it hasn't applied to clean-energy vehicles since 2014 and the policy was recently extended through 2023.
From next Thursday, buyers of ultra-luxury vehicles in China will have to pay a 10% tax. The extra levy applies to light vehicles costing at least 1.3 million yuan (€177,000), such as the Ferrari GTC4Lusso, Bentley Bentayga and Aston Martin DB9.
BEIJING/SHANGHAI, June 21 (Reuters) - China unveiled on Wednesday a 520 billion yuan ($72.3 billion) package of tax breaks over four years for electric vehicles (EVs) and other green cars, its biggest yet for the industry as it seeks to boost slower auto sales growth.
Li added that while owning and maintaining a car in China is about as expensive as it is in the US, lower China labor costs make ride-hailing more affordable there than in the US. “If you drive a car in the United States, it will cost you anywhere between $7 to $11 per day if you drive yourself,” Li said.
Under the extended policy, NEV vehicles purchased in China between January 1, 2024, and December 31, 2025, will be granted an exemption from the purchase tax amounting to as much as RMB30,00 (US$4,170) per vehicle.
The China 5 years tax rule requires foreign nationals who have resided in China for more than five full consecutive years to be treated as Chinese tax liabilities. This makes them liable with local tax authorities for the pay they receive from their Chinese employer, as well as their global income.
Customs duties are owed on nearly every product imported from China to the United States. This rule applies so long as the total value of the imported goods totals $800 or more (known as the De Minimis value).
India is one of the most protected automobile markets where import taxes are among the highest in the world of any major car making nation. This has drawn the ire of companies like Tesla which shelved its entry plans last year.
China's new battery technologies, which rely on cheap and plentiful minerals, are stabilising costs and removing the biggest risk to EV adoption: dependence on scarce minerals. As EV production costs fall in China, it is only a matter of time before the vehicles become much cheaper than ICE cars.
National Average Salary In China
As of May 29, 2023, the average monthly salary in Mainland China is approximately 29,300 Yuan ($4,214 USD), which translates to an annual pay of around 351,600 Yuan or $49,200 USD.
Apple has paid more than $80 million in back taxes and fines to China after understating its sales in the country in 2013 by $1.4 billion. China's Ministry of Finance announced the underpayment, saying it leveled a $10 million fine on top of the $71 million that Apple owed in back taxes.
EV prices are lower in China than in other countries, making them more accessible to the average consumer.
Full electrics (BEVs) alone accounted for 24% of the country's auto sales. This pulled the 2023 share to 33% (23% BEVs), and considering the current growth rate, we can assume that China's plugin vehicle market share will end around 40% by the end of 2023.
A flat rate of 20% is applied on the remaining categories of income, including incidental income, rental income, interest income, dividends, and capital gains, unless specifically reduced by the State Council.
The major driver for high car price is taxation, namely 25% customs duty, 17% VAT and between 1% to 40% consumption tax depending on the displacement capacity of the car. As such, the price for an imported car in China usually consists of more than 50% tax of various kind.
As previously reported by Drive, the most recent Federal Budget has forecast a decrease in revenue from Luxury Car Tax of almost 36 per cent – from the record $1.14 billion to $840 million – from the 2022-23 to 2024-25 financial years.
This is due to a couple of key factors — namely, high costs and lack of government support. The high expense of EVs in Australia comes down to us being a right-hand-drive market, with many EVs currently not built that way.
BYD sold 1.85 million EVs and hybrids in 2022, an increase of 211% year-on-year, which put it far ahead of Tesla with 1.31 million units. But BYD and Geely are the only purely Chinese companies in the top 10 of global sales for 2022. And BYD still sells as much as 97% of its vehicles in China.
The Wuling Hongguang Mini EV is by far China's best-selling fully electric car. A reminder of China's densely populated cities and need for a small vehicle class all but extinct in Australia, the Hongguang Mini EV moved an eye-watering 395,451 units in China over the course of 2021.
Australia is an import-only vehicle market. In 2019, Australia imported and sold c. 1.1 million new vehicles. Australia imports the majority of its vehicles from Japan, Thailand, Germany, and Korea.
Researchers have stated that approximately 20% of car prices contribute to government tax. This 20% accounts for the GST, import tariffs on cars imported from specific states, and the Luxury Car Tax. Luxury Car Tax forms the more significant part of it.
Imports In 2021, Australia imported $18.8B in Cars, becoming the 9th largest importer of Cars in the world. At the same year, Cars was the 2nd most imported product in Australia. Australia imports Cars primarily from: Japan ($7.17B), South Korea ($2.36B), Thailand ($2.04B), Germany ($1.76B), and China ($1.38B).
Tax Rates: The standard VAT rate in China is 13%, but there are also reduced rates of 9%, 6%, and 3%. Invoicing: All businesses must issue VAT invoices for the sale of taxable goods and services in China. There are two types of invoices: general VAT invoices and special VAT invoices.
In China, any individual carrying more than USD $5,000 worth of foreign currency (or CNY 20,000) in or out of China must declare that amount to customs.
To repatriate profits from a Chinese bank as dividends back to overseas shareholders, the company in China must pass an external annual audit by an accounting firm. This annual audit is done once a year around the Chinese new year, usually in April.